The Peer Monitor Index (PMI) rose in the first quarter of 2012, up six points to 55. The rise in the PMI is the first since the second quarter of 2011. Despite the positive movement, the industry outlook is cautious:
2012 could be one of the most challenging years in recent memory for law firms. The combination of sluggish demand and rates, along with rapidly rising expenses is making achieving consistent profitability difficult, and current trends are not favorable.
One current trend is uneven demand across practice areas. Labor and employment continue to show strong growth, as does IP litigation. Demand for corporate practices, however, is trending flat or slightly down. Overall corporate work dropped 1.5%, and bankruptcy work continues to steadily decline after peaking two years ago.
Perhaps most concerning is the continued increase in expenses. In Q1, both direct and overhead expenses rose by their highest growth rates in more than three years (6% and 3.6%, respectively). Attorney headcount and overhead expenses have now risen for five consecutive quarters. With increases in expenses outpacing increases in demand, firm profitability has been curbed.
For more information about the new PMI, including rates, productivity and performance by market segment, see the full report here. To find out how Peer Monitor can help your firm successfully manage through today’s economy, please contact Mark Medice or visit Peer Monitor’s website.
Posted by Emily Fisher