Myopia. Pic: Boston Children's Hospital
We noticed an interesting disconnect in two recent Altman Weil reports.
First up, the Altman Weil Flash Survey on Law Department Cost Control, in which 75% of general counsels reported budget cuts planned for 2009, with an average cut of 11.5%. Grim indeed. According to Altman Weil, the bulk of those cuts are coming at the expense of outside counsel (bringing work inhouse, switching to lower-cost providers, or the mythical alternate-fee panacea).
Then we have the Altman Weil Flash Survey on the Law Firm Credit Crunch. The view from BigLaw is rosier. 25% of firms believe revenue will be flat for 2009 and 8% anticipate an increase. The remaining 66% are tightening their belts – but not by much. Half of those who anticipate lower revenue expect a drop of only 1%-5%. Even the real pessimists (33% of the total) predict a decline of 6%-10%.
Why the disconnect? Are inhouse counsel overstating their cuts or do the firms just not grasp how bad things are?
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“Why the disconnect? Are inhouse counsel overstating their cuts or do the firms just not grasp how bad things are?”
The cuts may not have totally hit so some firms may be “hoping for the best” Law firms may be banking on the notion that they are diversified (IPOs down but backruptcy is up) and that they are not a discretionary spend…but with the consoladation on the client side and firms looking to slash every penny….Law firms will have to make some cuts/changes to their model. Expect more fixed fee arrangements which will really challenge the Partner/Associate mdoel
“Why the disconnect? Are inhouse counsel overstating their cuts or do the firms just not grasp how bad things are?”
The cuts may not have totally hit so some firms may be “hoping for the best” Law firms may be banking on the notion that they are diversified (IPOs down but backruptcy is up) and that they are not a discretionary spend…but with the consoladation on the client side and firms looking to slash every penny….Law firms will have to make some cuts/changes to their model. Expect more fixed fee arrangements which will really challenge the Partner/Associate mdoel