Single-digit growth and slow economic recovery—that’s what law firm leaders expect for 2014. Though the majority of leaders are optimistic about their firm’s growth in the coming year, only 21 percent expect profits per partner to grow by more than 5 percent. These cautious expectations are attributed to “two distinct drags on BigLaw businesses,” according to a recent article.
“On the one hand, you have the still-sputtering domestic and global economies, prone to macroeconomic shocks like the U.S. government shutdown in October,” Richard Lloyd writes in a The American Lawyer article analyzing the survey’s findings. “And on the other, you have the ongoing shift in the way that clients purchase legal services, with more work pushed to cheaper suppliers, hoarded in-house, or fought over by a pack of U.S., international and global firms.”
For the 11th year in a row, The American Lawyer asked Am Law 200 law firm leaders for their views on current market conditions, including the economic recovery, overall business sentiment, practice area expectations, lateral hiring plans and how their billing practices had changed. The 2013 Law Firm Leaders Survey garnered responses from 105 firms.
Highlights of the survey include:
- Two-thirds (66 percent) of survey respondents are “somewhat optimistic” and 10 percent are “very optimistic” about their firm’s growth in 2014, while just under a quarter (23 percent) said they were uncertain.
- An overall 65 percent of this year’s respondents said that they thought the speed of the economic recovery in the U.S. and Europe would remain the same in 2014, with only 27 percent saying they expect it to speed up.
- Litigation (43 percent), corporate (22 percent) and intellectual property (17 percent) are the top three practice areas respondents expect to grow in 2014, although 28 percent say corporate work will decrease and 38 percent say bankruptcy work will.
- A little over 80 percent plan to laterally hire a litigation partner in 2014, with 70 percent and 58 percent planning to add lateral partners in corporate and intellectual property, respectively, in the coming year.
- And 69 percent chose Washington, D.C., as the top lateral market, saying that’s the city they will most likely add laterals in during 2014. This was closely followed by New York City at 67 percent.
- When it comes to alternative fee arrangements, respondents said that AFAs accounted for only 18 percent of their billing practices in 2013.
For more survey findings, see “Highlights from the 2013 Law Firm Leaders Survey.”