Head of Advisory Services
David Altuna, Client Advisor
November 20, 2018Posted InLaw Firm Group
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Law Firm Demand is at its highest point since 2007.
We are pleased to announce the release of Citi Private Bank Law Firm Group’s Q3 2018 Quarterly Flash Report, which provides an overview of current financial trends in the legal industry, based on data collected through our Quarterly Flash survey of 190 law firms (79 Am Law 100 firms, 51 Second Hundred firms and 50 niche/boutique firms). Thirty-four of these firms fit our definition of either international1 or global2.
The top-line strength of 2018 continued to build in our nine-month results for the law firm industry. Revenue growth accelerated and continued to be fueled by inventory buildup that is being replenished almost as quickly as it’s collected. Further, growth in 2018 has been more balanced than any year in recent memory as demand has added lift to billing rate increases—the perennial driver of revenue growth in the extended post-recession period.
While we remain confident that revenue results will remain strong through the end of the year, we see some challenge to profit growth for 2018. Expense growth, which was already relatively high at the midpoint of the year, moved very close to revenue growth at nine months, threatening to place pressure on law firm margins by year-end. In fact, almost half of all participants have experienced margin compression thus far in 2018, despite stellar revenue results. While this will most certainly be a year of unprecedented industry growth since the recession—especially if firms focus heavily on collections—it may also be a year in which firms recalibrate their budgets to ensure that they grow profitably.
To read more about our findings, please refer to Demand, Revenue Continued to Grow in Third Quarter, Citi Survey Says, an article authored by Citi Private Bank's David Altuna and Gretta Rusanow in The American Lawyer.3
For more information about Citi Private Bank Law Firm Group’s Quarterly Flash Reports, please contact us.
1 Less than 25 percent but more than 10 percent of lawyers based outside the United States.
2 At least 25 percent of lawyers based outside the United States
3 A free subscription may be required to access the full article.