Citi’s Law Firm Predictions: It’s Back to Slow Growth 

The relative success law firms found in 2014 was an aberration, not the new norm, according to year-end predictions for the industry from Citi Private Bank’s Law Firm Group and Hildebrandt Consulting.

Profit growth this year and next year is likely to be in the low single-digits, says the recently released report, akin to what firms saw from 2010 to 2013. That’s in stark contrast to the years leading up to the recession, when 10% annual growth was common.

According to Citi, 2016 is looking like more of the same.

Other key takeaways:

• Demand in the first nine months of the year rose just 0.6% compared to the same period last year.
• Productivity declined half a percent, meaning lawyers don’t have enough work to keep them as busy as they have been in the past.
• The only practice areas that saw an increase in demand were real estate and corporate. Others like tax, litigation and bankruptcy are down.
• Firms are expected to continue relying more on capital contributions from their partners than on banks for operating cash.
• Alternative fee arrangements account for 16% of revenue at firms polled by Citi, compared to 42.6% of revenue that comes from straight discounts on rates.

The report ended with a hint of optimism, saying that despite the challenges law firms face, including soft demand, greater client expectations, and increased competition, “we believe most firms are making the changes necessary to deal with what will likely be the new reality for the foreseeable future.”

Source: WSJ Law Blog – Citi’s Law Firm Predictions: It’s Back to Slow Growth 

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