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In Case You Hadn’t Heard…Altman Weil Law Firm Survey Indicates Law Firms are Confident!

by Rebekah Smith

As financial experts, consultants, and valuation professionals, the outlook and performance of law firms has a direct impact on our practices.  If companies are working on estate planning with attorneys then there tends to be a related decline in estate valuations.  If merger and acquisition activity is down for a law firm, so is the need for a valuation professional.  If litigation work declines, so does the need for financial and damages experts.

Altman Weil, Inc. (provider of management consulting services to legal organizations) conducted a survey regarding the confidence of law firms titled Law Firm in Transition Survey 2011. The survey was conducted in April and May of 2011 and includes completed surveys from managing partners and chairs at 240 U.S. law firms with more than 50 lawyers.

Highlights from the survey include:

  • More firms saw an increase in revenue and revenue per lawyer in 2010 than they did in 2009 and fewer firms cut expenses in 2010 than did in 2009.
  • 95% of the firms plan to or have increased their billing rates in 2011.
  • Alternate fee arrangements have gained popularity, 95% of the firms indicated that they have used alternative fee arrangements and in firms with more than 250 lawyers, 100% of the firms used alternative fee arrangements.
    • However, the firms acknowledged that this work isn’t as profitable as hourly work.  Only 12% of the firms indicated the non-hourly arrangements were more profitable than hourly.
    • In general law firms indicated that in 2011 they expected to add more associates than they had in 2010 indicating an anticipation of growth.

In general, the survey concluded that law firm confidence was high going forward.  They anticipate that revenues will increase as a result of more work.  This is good news for those consultants and experts whose performance is tied to work generated by law firms.  And as law firms consider alternate fee arrangements with clients (non-hourly), valuation professionals and experts may see some requests from attorneys they work with to consider the same in their practices.

Have you experienced this in your practice?  If so, what type of requests have you had from attorneys for alternate fee arrangements?

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