Law Firms Report Decline in Profits but Remain Optimistic for Future Growth
Most law firms avoid posting jobs on Indeed or LinkedIn due to high costs. Instead, they publish them on their own websites, bar association pages, and niche legal boards. LawCrossing finds these hidden jobs, giving you access to exclusive opportunities. Sign up now!
Law firms experienced a decline in profits per equity partner of nearly 4% last year, according to a report by Wells Fargo & Co. The report found that the cost of hiring new lawyers to cope with a surge in work in 2021 dampened the increase in revenue. The hours billed per lawyer also fell 6% to 1,568, marking the first time in 15 years that the figure dropped below 1,600, as reported by Wells Fargo. Despite this decline in productivity, the report found that law firms saw an overall growth in revenue of 3%, with hourly rates rising nearly 6%. The decline in productivity is seen as a reset after a record-setting 2021, with some law firms trimming their associate ranks as demand decreased. However, law firms still remain optimistic about their long-term plans and aim for growth, with an expected demand growth of 1.6% this year.
The chairman of Winston & Strawn, Tom Fitzgerald, stated that the 2021 corporate deal flow was "completely atypical and quite frankly unsustainable." The previous year was more consistent and to make up for the lack of corporate deals, litigation has increased across the board. Despite this, law firms have not lost all the gains they made during the pandemic, with profits per equity partner remaining higher than pre-pandemic levels after a 19% increase in 2021. Firms expect a growth in demand of 1.6% this year, which could result in revenue growth of more than 5% in 2023 if they are able to increase their rates. Some law firms, such as Goodwin Procter, Cooley, and Kirkland & Ellis, have reduced their associate numbers as demand declined, and this trend could continue if demand does not pick up. Owen Burman, a managing director in the legal specialty group at Wells Fargo, warned that "everyone is quite sanguine, and that's probably not the perspective they should be taking." However, Kay Hoppe, a legal recruiter based in Chicago, stated that top law firms are not overreacting and remain optimistic about their long-term plans for growth.
Gain an advantage in your legal job search. LawCrossing uncovers hidden positions that firms post on their own websites and industry-specific job boards—jobs that never appear on Indeed or LinkedIn. Don't miss out. Sign up now!
What do you think about this article? Rate it using the stars above and let us know what you think in the comments below.
Upload Your Resume
Upload your resume now to receive jobs targeted to your background and future career goals. 90% of members who found a job through LawCrossing posted their resume.
