April 16, 2014
The report, called the Managing Partner Confidence Index, showed that managing partners are more optimistic than they were in the recent past about demand for legal services, increases in profit and revenue and the economy at large.
It was somewhat eye-opening because for quite some time, contextual evidence has suggested that Large Law firms do not have too much to be positive about. As this blog has chronicled previously, they are losing ground to Midsized Firms, facing increased client scrutiny about fees and struggling with a business model that many are calling outdated. Only four months ago, The American Lawyer conducted a similar check-in with Am Law 200 firm leaders and came back with a rather grim outlook.
That begs the question: Why are Large Law firms more positive these days?
- The Managing Partner Confidence Index only asks about the coming 12 months. We are slowly easing out of the recession and the business atmosphere for law firms has, indeed, been improving small step by small step, so there could be a mustard seed-sized reason to have genuine optimism. On that same note, 12 months is not too far into the future. Most who study the legal industry predict that significant changes – the ones that may make life hard for Large Law firms – will take longer than that to appear.
- Sometimes, it is hard to admit that things are not going the way one had hoped. That is true in life generally, and may be particularly applicable to Large Law firms. Once justifiably confident in their prosperity and economic power, it could be hard for them to admit that things have changed. Large Law firms have invested significantly in the status quo, and it may be difficult for them to accept that that status quo is shifting – and even more difficult to publicly confess that.
- It is also possible that a wider-scale view of this report may be necessary. While Large Law firm leaders do forecast positive things for revenue and demand, 58 percent of respondents think they will not be able to stop discounting their fees this year. In other words, the Managing Partner Confidence Index is far from a rosy picture through-and-through.
Ultimately, it will be interesting to see what the next 12 months have in store. It is entirely possible that we could see the positive things the leaders surveyed here are predicting. Even if that happens, industry-reshaping change will continue to bubble underneath it all, waiting for the moment when it boils over.