On Monday, Citi Private Bank and Hildebrandt Consulting released its outlook for 2014 for the legal industry. The report shows that there were no major shocks to the industry in 2013, according to The Wall Street Journal. The report states the following:
“We predict law firm profits will grow around 5 percent in 2014. Driving this is our expectation that on the strength of improved demand and carefully managed headcount growth, we may see less excess capacity and a stabilizing of realization. Together with modest rate increases, we would expect stronger revenue growth than seen in 2013. We also expect to see a laser focus on efficiencies, resulting in expenses growing at a slower pace than revenue, easing pressure on margins.”
In an interview with Law Blog, the chairman of Citi Private Bank’s law firm group, Dan DiPietro, said, “It’s a new day, and a new set of dynamics… has emerged. But we think leadership continues to evolve in their thinking and some firms at least are now getting out ahead of being in a reactive mode—saying let’s use this to our advantage, let’s go to our clients, figure out how to make this a win-win.”
The report continued with the following:
“While 2013 saw a continuation of the negative trends of the previous three years, we are cautiously optimistic about 2014. There are two reasons for our optimism. It is hard to imagine we won’t see a better first quarter in 2014, given that the first quarter of 2013 was so challenging. Moreover, with the prospects of the global economy continuing to strengthen in 2014, we think this is good news for transactional and other practice areas as the year progresses.”
From 2002 to 2007, there was a healthy growth in demand at 4.4 percent. Those numbers dropped drastically in 2008 and 2009. Demand then became flat from 2010 to now. The report said, “We believe that demand growth will be much more modest than during the decade before 2008.”
Gretta Rusanow, the director and Senior Client Advisor in Citi’s law firm group, said, “Understanding that it’s very much a buyers market, what have firms been doing to get closer to their clients? Have you tapped into all the existing opportunities?”