2024 Citi Hildebrandt Client Advisory Reports Law Firm Industry Revenue and Profit Growth Amid Ongoing Volatility
06 Dezembro 2023 - 8:00AM
Business Wire
Mid-single digit revenue growth and modest
profit growth expected for law firm industry in 2023, outperforming
previous year
Strong activity in high-performing practices
this year expected to continue, with optimism around transactional
rebound in 2024
The Law Firm Group of Citi Global Wealth at Work and Hildebrandt
Consulting today released their 2024 Citi Hildebrandt Client
Advisory, which establishes the broad landscape for the law firm
industry, how firms are responding to industry and market
challenges and their potential opportunities for growth in the year
ahead.
Measured against a challenging 2022, revenue growth for the
first nine months of 2023 was 4.8% on average for the industry. In
the same period, industry demand declined 0.7%, and the collection
cycle lengthened by 5.0% — continuing a nearly two-year trend of
law firm clients taking longer to pay bills. Expense pressure
remained strong, with total expenses up 4.8% at the nine-month
mark, driven by the inflationary pressures on firms’ operating
expenses.
As anticipated in last year’s Client Advisory, practices less
dependent on M&A and capital markets work performed better,
with litigation, regulatory and investigations, funds/investment
management, bankruptcy and restructuring, and intellectual property
seeing strong activity. This resulted in a greater decline in
demand for Am Law 1-50 firms (1.2% on average) for the first nine
months of 2023, while demand levels for other Am Law 200 segments
only decreased slightly. Even as demand declined, total lawyer
headcount climbed 2.9%, though growth moderated over the course of
the year. The high interest rate environment will likely remain in
2024, yet a rebound in transactional practices is anticipated when
the market steadies.
“Despite inflationary pressures and a volatile geopolitical and
macroeconomic environment, we continue to observe a stable legal
profession that performs better than expected in the toughest of
times,” said Brad Hildebrandt, Chairman of Hildebrandt
Consulting.
Talent and technology present both challenges and opportunities
for law firms in 2024 and beyond. A war for partner talent
continues, as equity partner headcount grew 0.9% in the first nine
months of 2023, compared to historically flat growth. Income
partners are also increasing over time, with 85% of firms that have
income partners increasing this number from 2017–22 — some
establishing the income partner category during this time. An
ongoing focus on income partner growth is expected, particularly as
a retention tool among large, highly profitable firms.
On the technology front, rapidly developing generative AI
captured the attention of the legal industry in 2023. Some firms
started experimenting with generative AI while also focusing
heavily on identifying the associated risks, with protecting client
and firm confidentiality top of mind. While generative AI has not
had much impact at this stage, it’s viewed as a positive
development for lawyers and another step on the long continuum of
lawyers embracing technology to improve the delivery of legal
services.
“Firm leaders continue to maintain a growth mindset and look
beyond short-term demand challenges by investing in talent and
opportunities to expand,” said Gretta Rusanow, Head of Advisory
Services for the Law Firm Group, Citi Global Wealth at Work. “We’re
optimistic that 2024 will be an even stronger year than 2023.”
Analyses and projections are based on data collected from Citi
Global Wealth at Work's sampling of primarily U.S.-headquartered
law firms, as well as conversations with law firm leaders. Sources
include the “Citi Annual Survey Database” of 211 U.S.-and
U.K.-headquartered firms, including 44 Am Law 1-50 firms, 37 Am Law
51-100 firms, 57 Am Law Second Hundred firms, and 73 additional
firms; 194 firms from the “Citi 9mo’23 Flash Survey,” including 44
Am Law 1-50 firms, 38 Am Law 51-100 firms, 51 Am Law Second Hundred
firms and 61 additional firms; the “Citi Law Firm Leaders Survey”
of 56 large firms headquartered in the U.S., U.K., China and India;
and the “Law Firm Leaders Confidence Index” which reports the
forward-looking opinions of law firm leaders from 146 firms.
This report is for informational purposes only based on those
responses from the survey and are not intended to represent
investment advice.
The views expressed herein are those of the participants and do
not necessarily reflect the views of Citigroup Inc., Citigroup
Global Markets Inc., and its affiliates.
The full Client Advisory can be accessed here.
About Citi
Citi is a preeminent banking partner for institutions with
cross-border needs, a global leader in wealth management and a
valued personal bank in its home market of the United States. Citi
does business in nearly 160 countries and jurisdictions, providing
corporations, governments, investors, institutions and individuals
with a broad range of financial products and services.
Additional information may be found at www.citigroup.com |
Twitter: @Citi | LinkedIn:www.linkedin.com/company/citi | YouTube:
www.youtube.com/citi | Facebook: www.facebook.com/citi
About Hildebrandt Consulting
Hildebrandt Consulting is continuing its long and distinguished
history as the preeminent global consulting firm in the legal
profession. With clients in over 15 countries, Hildebrandt has
built up unmatched expertise in every aspect of professional firm
management. Our reputation for helping firms arrive at strategic
solutions comes from our knowledge of the interdependent elements
that contribute to overall business performance.
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Media Kerry Snow kerry.snow@citi.com
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