Yet another survey has found that legal services demand was down for the first quarter of 2013—but it’s not expected to last. Citi Private Bank’s Law Firm Group surveyed 166 law firms and found that while demand is down 3.3 percent, almost two-thirds of respondents to another (albeit informal) Citi survey expect demand to increase this year.
The drop in demand, however, was mostly offset by “a combination of stronger-than-usual cash collections and rate increases that were slightly higher than seen in recent years,” writes John Wilmouth, senior client advisor at Citi’s Law Firm Group, in an article for Am Law Daily. Even though the increase in revenue was a disappointingly small 0.2 percent, the article notes that it was expected and mostly due to a 4.0 percent rate increase—the largest Q1 increase since 2008.
Overall expenses were up 3.4 percent, with operating expenses increasing 3.1 percent and lawyer compensation expenses up 3.8 percent. The compensation increase, however, was “out of proportion” to the small 0.5 percent increase in full-time equivalent attorneys. Citi attributes this to higher associate bonuses, a slight shift from associate attorneys to income partners, and rising health care costs.
Hours decreased in comparison to the same quarter in 2012. Hours were down 3.7 percent to an annualized 1,607 hours for Q1 2013, compared to 1,669 last year.
For an in-depth discussion of the Citi survey findings—including how they compare to Q1 2012 and geographic differences—read the full article here.