Check out The Legal Intelligencer’s latest article on law firm revenue trends.  Experts agree that it’s extremely challenging to grow revenues - not to mention profitability - in the current no-growth economy.  Altman Weil principal Ward Bower was interviewed for the story:

“Ward Bower of Altman Weil said the best way to increase revenue is always through increasing a firm’s share of existing clients’ wallets. That, however, has become competitive in a way it never was before with a booming economy providing a seemingly endless demand for legal work, he said.

And on top of low demand is increased competition, with firms from overseas looking to open offices in the United States, he said.

“I think firms really have to concentrate on their existing clients,” Bower said. “Somebody’s bird-dogging your clients all the time in a no-growth market. You can’t pay lip service to client service. You have to get out there and demonstrate and do it.”

Firms have to be alert to cross-selling opportunities, which is something Bower said firms have talked a lot about but have not always been successful in executing. For that reason, he said, it’s important to have someone other than the relationship partner solicit client feedback and find opportunities for other lawyers in the firm to do work for that client.

To get work from new clients in a slow-growth market is to steal it, Bower said, and that most often means hiring laterals. He said that is what is behind the growing number of lateral moves seen recently.”

Also included is a link to The Legal’s blog with six tips from Bower on connecting with clients to develop new business. 

Read it at The Legal Intelligencer

Law firms that want to get on a potential client’s radar screen for the first time should focus on personal contact and substantive content according to the Altman Weil Chief Legal Officer Survey conducted last fall.  We asked CLOs to rate the effectiveness of ten typical marketing activities including sponsorships, directory listings, social media and more.  Take a look at how they scored.

Read it at Altman Weil

Citi Private Bank is out with its preliminary report on how law firms fared in 2011.  Their results are based on data from 178 firms, including 81 AmLaw 100 firms, 47 AmLaw 200 firms, and 50 other firms.

“For law firms, 2011 was a tale of two years. The strong demand momentum coming into 2011, which continued through the first six months, caused many law firm leaders to believe that a degree of certainty had been attained. The second half of the year was a rude awakening as demand, particularly in transactional work, withered away and has yet to bloom again.

So, while revenue growth in 2011 exceeded the prior year, even greater expense growth squeezed margins and resulted in a PPEP (profits per equity partner) increase of just 3.3 percent  vs. 7.4 percent in 2010. In 2010, the industry was rebounding from a weak 2009 which made higher year-over-year increases easier to attain—not so in 2011.

Revenue growth of 4.1 percent in 2011 was due to moderate rate increases, a modest shortening in the collection cycle and a slight increase in demand. With low year-end inventory growth, the industry might be in for a slow start to collections in 2012, and if tepid demand growth continues into the year, it will create a challenging revenue environment.”

Read it at the AmLaw Daily

The American Lawyer has released the 2012 Lateral Report covering partner moves in and out of AmLaw200 firms between October 1, 2010 and September 30, 2011.

“If 2010 was a year for staying put, 2011 was the year that partners jumped back into the lateral market with full force. In the 12 months ending September 30, 2011, 2,454 partners left or joined Am Law 200 firms. That was a 22 percent increase from 2010…

“So what accounts for the increase in lateral hiring? In many cases, it’s cherry picking, as firms try to counter a stagnant economy by poaching top performers from rivals.”

Altman Weil principal Tom Clay explains it in a related story in today’s Wall Street Journal (subscription required) “The fastest way to increase [business] volume is to buy it.”

Read it at The American Lawyer

Momentum is building on non-lawyer ownership of UK law firms since the Legal Services Act took effect in October 2011. 

Last week:

“Liverpool’s Silverbeck Rymer is set to be acquired by software and outsourcing firm Quindell Portfolio in one of the first takeovers of a law firm under the Legal Services Act…

The deal, which requires approval by the Solicitors Regulation Authority (SRA), will create a combined insurance claims outsourcing operation.”

Read it at Legal Week

And this morning:

Australia’s Slater & Gordon, the world’s first publicly listed law firm, is set to acquire UK personal injury specialist law firm Russell Jones & Walker (RJW) for £53.8m in a Legal Services Act first…

Slater & Gordon became the first law firm ever to go public after listing on the Australia Stock Exchange five years ago.

Slater managing director Andrew Grech commented

“The UK market is inherently attractive to us because of its size and its jurisdictional similarities to Australia which the recent changes bring even closer into line. We have the huge advantage of having a five-year head start in operating in a listed environment and we can bring that experience to the UK through a kindred firm in RJW which has the business structure and the people to exploit that advantage.

“The goal is to be the leading direct consumer brand in the UK.”

Read it at Legal Week

Legal tech expert and blogger Ron Friedmann has written an excellent piece outlining the latest in Legal Process Outsourcing (LPO) and how BigLaw is adopting some of its key elements in new ways.

“BigLaw prides itself on its artisanal approach.  Few large law firm lawyers would write, much less follow, a playbook or best practices guide.  In contrast, LPO providers stress a systematic approach and cost reduction.  LPO providers rely on industrial disciplines that include process improvement, metrics, service level agreements (SLA), formal governance plans, lower cost labor, detailed playbooks, defined accuracy rates, and frequent progress reports… 

We can now look back to the early buzz about LPO – moving legal work to India – and understand that it missed the main point.  Location matters less than implementing industrialized processes.  India is just one destination for lower cost labor and lower cost labor is just one element of the LPO OS.

LPO providers have grown quickly in the last few years but remain a small percent of the BigLaw market.  LPO impact, however, has been disproportionate to its revenues.  Specifically, we now see wide adoption of many LPO OS elements by BigLaw. ”

Read it at ABA Law Practice Today

The American Lawyer crunched some numbers on the new partner classes announced in AmLaw 200 firms in January.  They found:

• 973 associates and counsel made partner at 97 firms that announced their classes as of 1/13/12
• Women accounted for one third of new partners
• Most new partners were still at the firms they joined out of law school
• It took ten and half years on average to be made partner
• In most cases new partners joined the equity tier
• In the majority of firms the number of new partners was up from 2011

Read it at The AmLaw Daily

There were 60 law firm mergers and acquisitions announced in the United States in 2011.  The annual total was up 54% from 2010 and at the highest level since 2008, according to Altman Weil MergerLine.  Seventeen new combinations were announced in the fourth quarter, including three of the biggest deals of the year.

“The momentum for law firm mergers built throughout 2011 and the year ended very strongly,” said Altman Weil principal Ward Bower.  “We think the trend toward larger deals will continue and the pace of mergers could accelerate in 2012.” 

Read it at Altman Weil

The National Law Journal has released in 2011 Billing Rate Survey. 

“For the third year in a row, law firms showed restraint with hourly rate increases, inching up at a rate only slightly higher than inflation in many cases.

The average firmwide billing rate, which combines partner and associate rates, increased by 4.4 percent during 2011, according to The National Law Journal’s annual Billing survey. That followed on the heels of a 2.7 percent increase in 2010 and a2.5 percent increase in 2009 — all of which paled in comparison to the go-go, pre­recession days when firms could charge between 6 and 8 percent more each year.

“Before the recession, I think we had a seller’s market,” said Altman Weil consultant Ward Bower. “There was so much demand that law firms were in the driver’s seat and could get what they wanted. Clients are in the driver’s seat now, and they aren’t going to pay those increases. They’re exerting much more control over pricing, strategy and staffing decisions.”

Read it at the National Law Journal

In pursuit of the eternal question, “What do clients want?” the Southwest Chapter of the Legal Marketing Association sponsored a panel discussion with three corporate counsel in September.   Here are some excerpts from the GCs’ comments:

“The number one thing I value in a relationship with the firms I use is a can-do attitude.”

“In the last 18 months I have fired firms, multiple firms, because we have finally realized that they just won’t take direction.”

“Just keep in mind we do have bosses.  We have people we’re accountable to and if you create an expectation [about winning a case], and I pass that expectation on and it goes the polar opposite of that, it’s not a real good situation.”

“Do your homework about who we are, what we are, show some insight into it.”

“Don’t be great at everything… Don’t oversell it.  Come to me and tell me something that you take pride in, that’s important to you and that you’re good at.  That resonates with me.”

“I appreciate paying for good lawyering.  I expect to pay for something that has value.”

Read it at Arizona Attorney