March 14, 2012 6:04 PM
Citi Survey Says Law Firm Leaders Have Growing, If Modest, Confidence in Prospects
Posted by Ross Todd
Happy days are here again—at least somewhat happier days.
That’s the muted message contained in the results of a survey of 58 law firm managers polled in the fourth quarter of 2011 by Citi Private Bank Law Firm Group as part of its latest Law Watch Managing Partner Confidence Index.
The survey, which was released Wednesday, suggests a growing overall sense of confidence among firm leaders, as well as renewed good feelings about the economy at large and optimisim about the business conditions facing the legal profession.
Gretta Rusanow, senior client advisor at Citi, notes that even though the survey shows a rise in confidence, the overall confidence levels of firm leaders is best characterized as “cautiously optimistic.”
Respondents to the survey included 24 leaders of Am Law 100 firms, 17 representing Second Hundred firms, 13 firms that fall outside those two lists, and four firms based in the United Kingdom.
“While there’s been an upward change, I’d say that say that firms are still modest in their confidence level,” Rusanow says. “The latter half of last year was a pretty lackluster period for law firms. So for firms to be somewhat optimistic that things will get better makes sense.”
Adds Rusanow: “The question for firms is will revenue grow at a pace the exceeds expense growth.”
The Citi survey uses a 200-point scale, with 100 points representing a “neutral” feeling, and 200 representing full confidence. A 17-point bump in the overall confidence level put the index value at 113, marking a return to the confident side of the spectrum, compared to the index value of 96 registered during last year’s third quarter. Forty percent of fourth quarter respondents said their overall confidence was either “somewhat better” or “considerably better,” while only 17 percent said their confidence level was “somewhat worse” or “considerably worse.” Citi’s index also saw single-digit upticks on questions related to profits, revenues, expenses, and demand.
The only area in which the Citi survey showed firm leaders expressing a “lack of confidence” was the one related to the discounting of fees. The score in that category, 79, was down three points from where it stood in 2011’s third quarter. Forty percent of survey respondents said they expect discounting to increase modestly, 2 percent see it increasing substantially, and most—57 percent—expect no change at all.
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