Survey: Law Firms on Steady Footing
With salary freezes at Latham & Watkins, layoffs at Dechert, Drinker Biddle and Wolf Block, and who knows what else going on out there, there is this one piece of good news for the legal industry. A survey released this week by legal consulting firm Altman Weil concludes that the large majority of law firms remain sound financially and on a steady footing with their banks. "We expected to see more distress from law firms," said Altman Weil principal James D. Cotterman. "But it appears that market conditions have not yet fully hit law firm balance sheets."
The survey polled 708 law firms in November, although only 85 responded. A quarter of respondents were from firms of 250 or more lawyers, half were from firms of 100 to 249 lawyers and the rest were from smaller firms. It found:
- Firms are taking preemptive steps to shore up their financial positions. Most are reducing operating expenses and deferring capital expenditures. Half said they were terminating staff and 38 percent reported terminating associates.
- Collections are virtually unchanged from a year ago. The only glitch was in major markets among the largest firms, where receivables are showing a bit more gray hair.
- Credit is unhurt. Forty percent of firms had lower interest rates than a year ago. Collateral and personal guarantees are either unchanged or not necessary. Most firms saw no decrease in the availability of credit.
- Revenue down. Sixty-six percent of firms expect revenue drops in 2009, with half of those predicting drops of greater than 5 percent.
To the extent the survey shows softening, said Cotterman, it is more likely to be in large firms with more than 250 lawyers and in major legal markets, particularly New York, Chicago, Washington D.C., San Francisco and Los Angeles. Read a summary or download the full survey at Altman Weil.
Posted by Robert J. Ambrogi on December 17, 2008 at 11:23 AM | Permalink
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