First, a look back at 2010: Firms continued their efforts to shrink their way to profitability, with a better outcome in 2010 than in 2009. Despite cutting expenses by 5.6 percent in 2009, firms experienced a slight decline in profits per equity partner (PPEP) of 0.3 percent. Contrast that with 2010, when profits rose 7.4 percent. While demand was essentially flat, and revenue increased only modestly at 1.3 percent, 2010’s profit growth can best be attributed to a 2.2 percent reduction in expenses and an industry wide drop in equity partner head count of 0.7 percent.
Our results are based on a sample of 179 firms (84 Am Law 100 firms, 50 Second Hundred firms, and 45 additional firms). Citi Private Bank provides financial services to more than 600 U.S. and U.K. law firms and more than 35,000 individual lawyers. Each quarter, the Law Firm Group confidentially surveys firms in The Am Law 100 and Second Hundred, along with smaller firms. In addition, we conduct a more detailed annual survey. These reports, together with extensive discussions with law firm management conducted on an ongoing basis, provide a comprehensive overview of financial trends in the industry and insight into where it is headed.
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