The three heavy hitters in the BigLaw metrics performance reporting world who draw their data directly from law firm general ledgers either as bankers (Citi and Wells Fargo) or as financial reporting applications (PeerMonitor) have just all come out with their latest reports, and they’re in rough accord on the numbers that really matter. In case you were wondering, I like all three of these sources because of where their data comes from. Yes, they draw from somewhat different populations of firms, but they’re close enough that lining their numbers up side by side can be informative.
So without further ado, here are their numbers, adjusted by yours truly to come as close to Year Over Year results as possible (that is, 2013 vs. 2012).
| Citi | Wells Fargo | Peer Monitor | |
| Revenue | +0.5% | +1.5% | (not reported) |
| Rates | +3.7% | +3.5% | +3.2% |
| Expenses | +2.9% | +3.5% | +3.0% (approx.) |
| Productivity | (down) | -2.5% | -0.7% |
| Demand | -2.3% | -2.5% | (flat/down) |
| Headcount | +0.4% | +0.9% | +0.7% |
| Realization | (down) | “more difficult” | 84.8%, an all-time low |
| Profitability (estim.) | down | down | down |
Here are a few selected quotable quotes from their reports:
- “The industry is no longer in free fall.”—Citi [Swell!—that’s a ringing endorsement of health.—Bruce]
- Firms “continue to struggle to gain any ground.”—Peer Monitor
- “Growth is increasingly a zero sum game.”—Peer Monitor
- “We continue to see stratification, where the stronger firms continue to get stronger.”—Wells Fargo
Let me hasten to cement that last point. From the Wells Fargo report:
“I’m not surprised by what I see,” says Jeff Grossman, the senior director of banking for the [Wells Fargo] legal specialty group, who shared the results of the Wells Fargo survey Thursday with The Am Law Daily.
As has been the case for the past few years, a small number of top performers significantly outpace the averages, Grossman says. One firm in the survey reported a nearly 35 percent revenue boost in the first half of the year, he says, with the least successful firm recording revenue down almost 20 percent.
Any reputable statistician would tell you that averages mislead. In the world of BigLaw today it may be an exaggeration, but not a facially outrageous one, to say that averages lie.
Still, the only way to talk about the industry at large with any rigor is to talk about statistics and averages.
Which brings me to the theme of this column.
Bruce
How about this for a ‘heretical’ view”
– utilisation is down but the 2400 hrs+ of the boom times was simply ridiculous and, in reality, false. So lower utilisation takes us back to where we should be.
– same for profit – being a lawyer is a hard job but its not a job where every partner in the top 50 (or whatever) deserves $500k let along 7 figures. So profit is being reduced to a valid level from previously, again, ridiculous levels.
I recognise that some firms do not fall into these categories and have retained utilisation and profit; but the question is whether these firms should be seen as the norm and what everyone else should be shooting for; or seen as outliers that some firms should be shooting for, but most should not. Is that accepting mediocrity – perhaps.