Law firms cautiously optimistic for 2012
Local law firm leaders say 2011 was an improvement over 2010, but the outlook for 2012 is murky given the political uncertainty in the U.S. and economic turmoil in Europe.
Yet as the economy continues to improve, practice areas including corporate, litigation, intellectual property and real estate are expected to be increasingly busy, whereas bankruptcies are expected to slow, a positive sign for the overall economy. Meanwhile, legal hiring for associates is expected to continue to be tight, according to lawyers and industry watchers.
“We’re having a good year both in terms of revenue and in terms of attracting new talent,” said Andrew Glincher, CEO and managing partner of Nixon Peabody LLP. “I’m looking forward to 2012, although I’m also mindful of the political realities of the Democrats and Republicans working against one another. That will pretty much keep our economic recovery held back.”
In 2011 Nixon Peabody, which has roughly 146 lawyers in Boston, hired 43 lawyers — partners and associates alike.
“I’m seeing some really good signs in terms of business and activity, but you have to be cautious, too,” said Glincher. “I take a look at the clients I’m representing and they all have different challenges. For law firms to think they’re going to escape those challenges, that wouldn’t be good business.”
Bill Curry, co-managing partner of Boston-based Sullivan & Worcester LLP, said that all practice areas were up in 2011, and the firm’s leaders expect corporate work will stay flat or increase in 2012.
Still, on a national level, law firms are predicting small profitability growth for 2012. About 58 percent of the country’s top 200 law firms expect profits per partner to grow 5 percent or less next year, compared with 41 percent of firms who thought so last year, according to a recent survey from American Lawyer.
Clients are also growing more reluctant to part with their cash, with 81 percent of firms seeing more requests for discounts from their clients, according to American Lawyer.
“I think that the legal business is generally picking up, but I don’t think the legal profession as a whole will be back to what it was in pre-recession times for quite a long time,” said Don Frederico, a partner at Pierce Atwood LLP in Boston.
Frederico’s firm, which has more than 130 lawyers across seven offices, has seen business pick up in a handful of practice areas including intellectual property, litigation and financial services.
Next year, “I think lawyers will continue to see business improve, but also I think that with the growth of new technologies, we’re going to see the continued development of new areas of practice,” said Frederico.
David Rosenblatt, managing partner of Burns & Levinson LLP in Boston, said the client push back over billing rates will continue.
“Starting with the recession, clients were able to assert the upper hand in their business relationship with law firms, demanding better value and more reasonable costs,” he said. “That’s going to outlive the recession, so all firms had better be prepared to deal with that.”
The legal hiring market remained bleak in 2011, with most moves being partners jumping from firm to firm. For 2012, the job market looks like it will continue to be hit-and-miss for many out-of-work lawyers, many of whom are recent graduates.
During the first quarter of 2012, one-in-three law firms plan to hire legal staff, however 4 percent are actually planning to reduce personnel, according to a recent Robert Half Legal survey. According to that same survey, bankruptcy and foreclosure, litigation, and labor and employment are the three areas that are expected to see the most growth in the first quarter.
“Hiring has picked up incrementally, but we’re still not back to a robust hiring market,” saidBrion Bickerton, legal hiring consultant with The Bickerton Group in Boston.