Law firm managing partners expressed only “moderate” confidence about their financial prospects in the second quarter of 2015, according to the Law Firm Group at Citi Private Bank’s quarterly evaluation of managing partner morale.
“It’s a more muted level of optimism,” said Gretta Rusanow, senior client advisor in Citi’s law firm group.
Released Wednesday, the report focuses on attitudes about the overall economy and the legal industry — based on a number of metrics, including profits, revenue and expenses. A total of 54 law firms participated in the survey including 39 big U.S. law firms, 12 niche firms and three U.K. firms, according to Citi. Their managing partners were asked to grade their confidence on a scale of 0-200 on a number of topics, such as discounting, legal demand and lawyer hiring.
The report found that managing partner confidence about the economy at large dropped to 111 — eight points lower than the previous quarter.
Confidence about business conditions in the legal profession, as well as firm revenue, declined to 110 and 112 respectively — both five points lower than the previous quarter.
Despite the drop in confidence, Rusanow said the overall results remain positive: “It’s still above the 100-point market,” she said, which by Citi’s standards means the lawyers were feeling better than neutral.
“I think if you look at the first quarter results in the industry, we see the start of the year was more modest than the year prior,” explained Rusanow, noting that transactional practices are doing better than litigation, an area where in-house counsel continue to find new ways to push back on price.
“What we’ve been seeing.. over the past few months, is the increasing presence of non-partner track associates and lower-cost associates” at law firms, said Rusanow. She said law firms are hiring associates at lower salaries to offer them to clients for a better price.
Throughout the report, Citi referred to managing partners’ confidence as “moderate.”
While managing partners felt worse about the overall demand in the legal industry — nine points lower than last quarter at 143 — confidence improved in a couple other areas, such as discounting, which came in three points higher than the first quarter, yet still at a sub-100-point score of 78.