Citi Private Bank, which uses its connections with over 600 U.S. and U.K. law firms and 35,000 individual lawyers, to produce yearly reports on how the legal market is doing, has released its “first-half” report, now that we are halfway though the business year, and is predicting that 2013 may be a flat year, since revenue growth has been so low.
Citi reports that demand has declined at 1.3 percent this last quarter, and while that is less drastic than 3.3 percent the previous quarter, it’s still not an uptick. Compound that with the increase in head count, and you have a situation of excess capacity that has characterized the market these last few years, causing pricing pressure.
In fact, the revenue growth of 0.5 percent is not due to any increase in demand – as we’ve said, it’s declined – but to growth in billing rates of 3.7 percent, as Am Law Daily reported.
Though the headcount increase of 0.4 percent is slightly lower than the 0.5 of the first quarter, it still contributes to the supersaturating of the market. This is why billable hours remain at a historical low, and this exacerbates the pricing pressure. Things aren’t as bad as 2009 and 2010, but they aren’t exactly “recovered” either, and expecting a flat year might be the best we can do at this point.