Bottom line:  slightly more offers, slightly more callbacks, but overall (nationally) the average size of summer classes at large firms in 2012 is the same as it was for the summer of 2011.

You can read the whole report here.

Some highlights:

• demand for legal services is not likely to grow robustly for the foreseeable future
• to gain greater efficiencies, firms will continue to seek out new business models based on “redesigned work processes, greater emphasis on project management, and new approaches to expense management and professional development”

Introverted lawyers/law students may also want to check out a recently published book called “Quiet, Please: The Power of Introverts in a World That Can’t Stop Talking.”   You can read an interview with its author Susan Cain here.

Despite the economy, 73% are optimistic about their firm’s future in 2012. 

Transactional practices at these firms continue to struggle.  Only about 20% are expecting to see any revenue growth in this area. 

A majority (58%) are expecting only modest (less than 5%) profit increases for 2012.

54% reported that clients refuse to pay for work of first and second year associates. 

75% used contract lawyers in 2011 (up from 55% last year).  37% outsourced work to lawyers managed by third parties (up from 25% last year).  28% outsourced work to non-lawyers managed by third parties, (a two-fold increase over last year).

With a continuing emphasis on greater efficiency, firms are increasingly expecting their lawyers to have project management skills.   One respondent said that, in order to succeed, it is not enough to have excellent legal skills, “you also must be able to manage teams and a budget, interact with people, and anticipate your clients’ needs.”  There is also an increased importance placed on the skill of developing new business (it is no longer enough to just  maintain existing client relationships).     

89% are expecting to add lawyers in 2012 through a combination of lateral and entry-level hiring.  However, only 29% are expecting a larger first-year associate class in 2012 (though that is up from 13% in 2011).  74% are expected to hire lateral corporate partners.  82% are expecting to add lateral litigation partners.    

Only 14% reported deferring starting dates in 2011, compared to 46% in 2010.

We’ve regularly blogged about the Peer Monitor system before, but to refresh you , it is a service that allows law firms to access their peers’ financial data (in the aggregate) in exchange for supplying their own data to the system for others to access (on a normalized and aggregated basis). There are 35 Am Law 100 firms, 35 Am Law 200 firms and 30 NLJ 250 firms in the system. You can find more information about the Peer Monitor system here.

You can read a summary of the report here.

Among other things, the report shows that demand for legal services continues to grow, though the rate of growth has slowed.  At the same time, expenses have continued to increase as has the rate of that increase.   Part of the explanation for the increase in expenses is that new attorney hiring has increased (as it has been doing for the previous three quarters) in anticipation of growing demand. 

The report warns: “While firms have been hiring, however, demand has slowed as the year has progressed, widening the gap between law firm capacity and available work. Whether this trend continues will depend on the performance of the broader economy and whether we see continued recovery in litigation and transactional work.”  Stay tuned.

Both demand and revenue are up slightly, but so are expenses.  Headcount remained flat, which suggests lawyers are working a bit harder. 

Citi’s report states:

[T]he economy appears to be in for a protracted period of slow growth or no growth, given the systemic issues it is facing. . . . It’s hard to see any way that this environment is good for law firms in the short term. There’s a good chance that M&A, private equity, and IPO work will slow as companies and investors seek some clarity before doing deals, and a spike in litigation seems unlikely.

Since the pie is not getting any bigger, one of the only ways for firms to grow is by cutting into their competitors’ slices.  Accordingly, Citi predicts, “top-performing firms will seek to leverage their market advantage to buy talent for their weaker practice areas” just as “rainmakers at underperforming firms” are exploring the job market for other opportunities.

While there was a wide divergence of results, on average, net income, revenue, and profits per partner were up slightly at the nation’s largest law firms.

The survey also found that there is more litigation work. 

In discussing the survey results, a Wells Fargo managing director predicted that growth will slow for the second half of 2011, but that it will still end up being a better year than 2010 overall. 

The full survey results, which were collected by Wells Fargo Wealth Management’s Legal Specialty Group, are not available, but you can read the AmLawDaily report about them here.

By the way, for those of you think you may be headed to biglaw or are considering it, you ought to consider subscribing to the AmLawDaily enewsletter.  There’s a free limited access version, which you can sign up for here.

We’ve regularly blogged about the Peer Monitor system before, but to refresh you , it is a service that allows law firms to access their peers’ financial data (in the aggregate) in exchange for supplying their own data to the system for others to access (on a normalized and aggregated basis). There are 35 Am Law 100 firms, 35 Am Law 200 firms and 30 NLJ 250 firms in the system. You can find more information about the Peer Monitor system here. 

You can read a summary of the report here. 

Among other things, the report shows that — very much in line with how the overall economy performed in Q 2 — the market (at least for large law firm legal services) gained a bit for the third quarter in a row.  However, the “soft patch” that the economy recently hit is causing law firms to “prepar[e] for continued uncertainty and  monitor[] headwinds and risk factors.” 

Bottom line:  “While the law firm market continues to show gradual improvement, growth is still well below historical averages, and a myriad of cautionary factors remain in place, including client rate pressures and
rising costs.”