Check out Larry Bodine’s discussion of the ACC/Serengeti study that predicts a downturn in spending on outside law firms in 2009. Also take a look at Hildebrandt’s Fall 2008 Special Client Advisory. Those looking for good news or positive signs will be disheartened. From Hildebrandt:
Unfortunately, it seems certain that a quick turnaround for the economic crisis will not be possible. Despite the aggressive efforts of governments and central banks around the world to bolster the capital markets and to free up credit, it is apparent that it will take several months to work our way out of the current quagmire. We believe that we are unlikely to see any significant turnaround until late 2009, at the earliest.
As I wrote yesterday, the smart money is betting on a later date.
The Special Client Advisory also contains this insight:
If, as seems likely, across-the-board rate increases will not be possible in 2009, the hit on law firm profitability will thus be particularly severe. Moreover, the current crisis is occurring at a time when client resistance to the level of legal fees has already been mounting. All of this may ultimately require a re-thinking of the basic law firm economic model.
The use of the word "may" in the highlighted sentence could rank as one of the great understatements of this episode. Having said that, my encounters with leaders of large law firms over the last several months lead me to believe that most (indeed, almost all) do not understand or appreciate the profound changes that will be required by law firms just to survive this toxic environment.