Citibank’s latest report on the financial performance of the legal industry as of the end of the 2nd quarter 2015 is a bit less optimistic than their 2014 end of year report.
You can find the full report on the first half of 2015 — via the American Lawyer — here.
Revenue – as a result of increased demand for legal services – is up, but it is lagging behind the increases we experienced in the first half of 2014 (3.3% at the midpoint of 2015 vs. 4.4% midway through 2014) and expense growth is up.
The growth in expenses was largely due to the fact that firms paid larger bonuses at the beginning of this year (to reward lawyers for a relatively strong 2014). There was also an increase in operating costs due to expenditures on cybersecurity and health insurance, among other things.
Sounding a similar theme to the Thomson Reuter’s 2014 end of year report, it seems as though not all large firms have experienced the same impact. The AmLaw 100 continues continues to experience positive momentum whereas the Second Hundred actually saw a decrease in demand. Interestingly, it appears that the niche/boutique firm market outpaced both the AmLaw 100 as well as the Second Hundred.
Citi’s bottom line: “While we remain optimistic that revenue and profit will both grow, we believe that they will now fall short of 2014’s results.”