The Citi Private Bank Law Firm Group released its latest report and once again informed us that revenue is up — but only because firms have jacked up their rates — demand is sluggish, and firms are taking longer and longer to collect on their bills largely because in-house counsel have made everything unduly difficult.
The biggest sticking point in the report is over just what the next year to 18 months will bring. Citi Private Bank takes the firm stance that there is no looming recession, but the people running the firms and spending every day with access to financial records of businesses across sectors are totally smelling that recession. A majority of “industry leaders” surveyed believe the bottom falls out next year and an even larger majority see trouble by 2021.
“Although 2020 is expected to be a positive year for the law firm industry, it is an opportunity for firms to ensure they are well-positioned should there be a downturn in the market,” said Gretta Rusanow, Head of Advisory Services for the Law Firm Group at Citi Private Bank. “Despite the ongoing macroeconomic uncertainty and volatility, and a challenging talent market, we expect the most successful firms will continue to expand and innovate in 2020. For those firms, expansion will be closely aligned to the firm’s business strategy – more so than pursuing opportunistic growth.”
This view doesn’t necessarily clash with firm leadership’s sense of a recession. Law firms often experience recessions on a bit of a lag. It’s why law firms talk about the Great Recession as a 2009 phenomenon instead of something that burned everyone in 2008. There’s money to be made in law when the rest of the economy begins its skid. Indeed, right up until the point where firms can’t continue to boost revenue by raising rates, recessions aren’t bad at all for firms.
Rusanow’s advice for firms may not come out and say it, but she’s telling everyone to invest in countercyclical talent.
So if you’re in bankruptcy, this might be a good time to test the waters.
Earlier: In-House Counsel Make Increasingly Arcane Billing Demands And It’s Costing Firms Money
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.