2012 a better year than expected for US law firms

Against the expectations, a preliminary survey conductecd by Wells Fargo Private Bank's Legal Specialty Group, shows that US big law firms had a profitable year 2012. The final survey for 2012, which included more than 200 law firms from around the USA ranging from the very largest to some boutiques, will be available in March. But here are some of the positive facts already released for the participating law firms:

  • Gross revenues increased by 5 percent during 2012.
  • Net income increased by 6 percent during 2012.
  • Firms are budgeting 4 percent revenue increases for 2013.

These numbers come as quite a surprise as all reports during fall of 2012 pointed to the opposite direction. In November 2012 Wells Fargo itself reported on some other troubling trends, including declines in both billable hours and firmwide realization rates: The surveyed firms reported that as of September 30, they were carrying balances on their lines of credit that were, on average, a third higher than they were a year ago at the same time. That, says Legal Specialty Group national managing director Jeffrey Grossman, suggests more firms than usual are relying on short-term debt to fund operations late in the year.

But instead, as the Wall Street Journal Blog reported, "law firm prospects appear to have bucked up in 2012, bringing numbers that, on average, were better than what Wells Fargo has seen in the past few years since the recession". However, the augment may be a result of added collection efforts in light of the looming fiscal cliff. According to the report law firms may have been extra motivated to get cash in hand before year's end in an effort to protect their top earners from hefty tax hikes in 2013. Similarly, as reported by Legal Current the managing director of Wells Fargo Private Banking urged caution although growth of revenue and jobs is good news. "If large law firms take their foot off the gas pedal on controlling expenses or stop focusing on productivity they may see 2013 under the same pressure as 2012."

 

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