A new report (.pdf) by Hildebrandt International and Citi Private Bank paints a grim forecast for 2009 and tells firms to make some “fundamental changes” in the way they are structured and do business.
“A financial crisis is a terrible thing to waste,” the report says before it advises firms to outline a clear strategy for the future, adjust associate compensation, rethink staffing structures, and create efficient ways to deliver legal services.
More basics of business planning, and the California perspective, after the jump:
The 2008 data is based on a survey of 140 law firms and billing data reported by 74 firms to Citi, including 30 in the Am Law 100.
California’s AmLaw 100 firms are usually buoyed by tech, IP and biosciences work, but they won’t be immune from the current trends, said Brad Hildebrandt, president of the consulting company.
“California firms, because most of them are international in scope, the region doesn’t have as much of an effect as it used to,” Hildebrandt said. “The trends we are seeing are applying to California as much as they are applying to anyone else. I think the general downturn has affected everybody. Business is generally down, it doesn’t really matter where you are.”
Demand for legal services is expected to remain flat, but net profit could dip 5 to 15 percent, the report says. Layoffs of staff and attorneys should continue, more firms will dissolve, and firms will go into greater debt, it says. But countercyclical practices should start to pick up the slack for other areas that have experienced a downturn and the Obama administration could deliver business for attorneys practicing in energy, health, could deliver business for attorneys practicing in energy, health, infrastructure and government contracts. M&A work could rebound as cash-rich companies look for sweet deals and litigation could heat up as people look to lay blame for their troubles.
More on the report from AmLaw Daily.
— Amanda Royal