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Thursday, April 30, 2009

Law - "Recession hits top law firms' profits: Many Chicago practices have cut staff and even the top firms are seeing their revenues fall or flat line"

That is the headline to this long story today in the Chicago Tribune, reported by Ameet Sachdev. It begins:

Partners at Chicago law firms may look back longingly at 2008.

American Lawyer magazine on Wednesday released its annual ranking of the nation's 100 highest-grossing law firms, which offers a picture of the financial health of the legal industry.

Amid weak results across the country last year, Chicago firms scored some bragging rights against their New York rivals. But business at the start of 2009 was so dismal that law firm managers and industry consultants have put last year's results in the rear-view mirror. In the first quarter, big firms made unprecedented cuts that put thousands of attorneys and staff on the street.

"The big story is what are this year's numbers going to look like," said Kay Hoppe, a Chicago-based legal consultant. "This is the first year in my memory that almost every law firm would take last year's numbers." * * *

The downturn is a new experience for many lawyers at the top 100 firms. Since the early 1990s, they have grown used to steady increases in revenue and profits. The increases accelerated between 2003 and 2007, fueled by surging demand for lucrative work in the corporate and finance sectors and annual rate hikes.

But the bursting of the housing bubble and the ensuing credit crunch have brought an abrupt end to the golden age for corporate lawyers. American Lawyer reported that profits per partner at the top 100 fell by 4.3 percent, to an average of $1.26 million, and revenue per lawyer dropped 1.2 percent, to $818,000. The magazine said it was the first time since 1991 that both average profits per partner and revenue per lawyer dipped among the top 100 firms.

And, although this story reports:
Amid the grim results, there were bright spots at some Chicago-based firms. Baker & McKenzie's revenue per lawyer grew 10 percent, to $605,000, and Jenner & Block's increased 6.7 percent, to $795,000.
another story today in the Tribune reports:
Baker & McKenzie laid off 38 attorneys and 86 paralegals and staff employees in North America on Tuesday, as the financial crisis continues to take its toll on corporate law firms.

Posted by Marcia Oddi on April 30, 2009 08:57 AM
Posted to General Law Related