Hildebrandt and Citibank Private Bank both recently issued reports on the large firm legal market as of the end of the second quarter of this year (June 2012). We regularly blog about their quarterly reports.
The latest reports are not positive.
Among the key findings:
- demand for legal services fell slightly (0.2%)
- law firms’ expenses are continuing to rise faster than their revenues; however the pace of the increase has slightly slowed in Q 2
- the growth in attorney headcount slowed slightly (the associate replenishment ratio went from 1.4 in Q 1 to 1.3 in Q 2
- productivity (a measure of the ratio between capacity and demand) fell 2.5% (productivity also fell in the previous 2 quarters)
- clients continue to exert pressure on pricing
The reports caution that hiring may slow as the year wears on, as firms realize that market demand does not currently justify adding additional capacity. They predict that the large firm legal market will continue its “sluggish, largely flat trajectory” [Hildebrandt's language] for the foreseeable future.