Some Partners Still Seeing Profits
Since the start of 2008, many observers predicted that law firms would experience decreased revenues and diminished profits per equity partner (PPP) for the year. But so far, a handful of law firms are reporting modest increases. Earlier today, The Am Law Daily reported that Pittsburgh-based K&L Gates announced an increase of 27 percent in 2008 revenues, as well as 7 percent growth in PPP. The firm also grew from 1,235 to 1,552 attorneys, following mergers with Texas firm
Hughes & Luce and North Carolina's Kennedy Covington Lobdell & Hickman. The firm is continuing with plans to expand in 2009 with the launch of an office in Frankfurt and potential merger with Chicago-based Bell Boyd & Lloyd.
K&L Gates' growth isn't an anomaly. A subsequent post at The Am Law Daily reports that Wilmer Hale saw a 1.2 percent increase in gross revenues, and a 1.44 percent increase in PPP. Revenue per lawyer also went up by 5.8 percent to $1,027,103. Meanwhile, Above the Law notes that in a firm-wide email, White and Case boasted of a seven percent increase in 2008 revenues.
So what accounts for the growth? Above the Law speculates that cost-cutting may play a big part. ATL suggests that the 70 lawyers White & Case cut a few months back may have contributed to the firm's growth, and that K&L Gates' new frugality with bathroom supplies might have also made a difference. And cost cutting remains a part of firms' financial strategy. Firms such as Squire Sanders and Akin Gump are laying off dozens of non-legal support staff, according to the National Law Journal. And Abbe Mald Bunt, a recuiter, told the NLJ that firms will probably never again hire the same volume of support staff as they did through the '70s, '80s and '90s.
Are cutbacks as a means to preserve profits smart business strategy? Or is downsizing associates and support staff cold-hearted at a time when the economy is floundering and partners, on the whole, are doing well. At Law 21, Jordan Furlong references Obama's inauguration speech (in which Obama finds inspiration in the willingness of workers to take a paycut to keep their colleagues employed) and asks:
The answer to that question might just determine
how well, if at all, your firm weathers the coming months.How many partners in your firm would willingly — enthusiastically —
assent to a drop in profits per partner in order to keep fellow
partners in the fold?
What do you think?
Posted by Carolyn Elefant on January 21, 2009 at 05:06 PM | Permalink
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