By Casey Sullivan
Jan 14 (Reuters) - Two legal advisers are cautiously
optimistic about the direction of the U.S. legal industry in
2013, according to a Citi Private Bank and Hildebrandt
Consulting report released on Monday.
Dan DiPietro, chairman of Citibank's Law Firm Group, and
Brad Hildebrandt, a law firm consultant, released a co-written
advisory showing that law firm expenses in 2012 dropped from
2011 levels and that some practice areas experienced growth --
two positive indicators for 2013.
The report, based on surveys of 205 U.S. law firms by
Citibank and 116 by Thomson Reuters Peer Monitor Index, traced
the 2012 fall in expenses to the recession, when firms delayed
updating technology and other systems.
In 2011, with the economy on the mend, law firms began
updating, which resulted in a number of "catch-up" expenses, the
"If this catch-up factor has now played out, 2013 could show
more moderate expense growth," the report said.
The report was mildly optimistic about demand for legal
services in 2013, citing a 4 percent increase in labor and
employment and a 1 percent increase in corporate work in 2012.
The report also cited signs of an improving overall economy
based on housing market and employment data.
Over the past four years, demand for legal services has been
flat, at 0.4 percent, while in the years between 2004 and 2008
demand rose 3.7 percent, the report said.
Clients continue to pressure firms to bring down costs using
a variety of strategies, from tweaking fixed billing rates to
negotiating alternative fee arrangements. Some clients, for
example, are refusing to pay for online research, according to
The failure of some of the country's largest law firms has
served as a reminder of the ongoing financial strain in the
legal industry. In the last five years, eight large U.S. law
have folded; in the prior two decades, the number was 18.
Hildebrandt, the law firm consultant, said he believes law
firms increasingly are aware of the missteps of others and are
becoming more proactive in tackling financial issues with a
variety of solutions.
"Most dissolutions are preventable," he said.
Hildebrandt is an adviser to Thomson Reuters.
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