Law firms continue cutting costs to maintain profits
Price pressure from clients and the need to cut costs have become lasting features of the legal service industry, says a new survey from legal consulting group Altman Weil.comments powered by Disqus
The survey addressed managing partners at more than 300 US law firms with 50 or more lawyers.
Large and small firms are still able to turn healthy profits, but many firms are still relying on cost-cutting to boost profitability, rather than adding business. Pay for top lawyers remains high, but more than nine out of ten respondents to the survey said they expect continued pressure from clients on price.
More than two thirds of respondents said that cutting support staff, competition from other firms on profitability, and use of non-staff contract lawyers are embedded in law-firm management strategy.
"In the face of discounted rates, more work being taken in-house, and the unwillingness of clients to pay high fees for perceived low-value work, something has to give," said Eric A. Seeger, an analyst at Altman Weil and one of the authors of the report. "It is going to be harder to sustain year-over-year profitability gains, the way we had been seeing for so many years."