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Legal lender paints pessimistic picture for those in legal jobs

Posted by: Laurence Simons 13/09/12

Did everyone at Citi Private Bank's Law Firm Group's dog die this year, or something? Did they all wake up to find a pooch slumped face down in a bowl of biscuits? Are they all holding the framed portraits of themselves with their former furry friends and crying? Did they have to shoot the damn things themselves?

Because widespread dogicide is the only possible reason we can find for the firm's continuing pessimism this year. In August, the CPB Law Firm Group - which, let's not forget, is US law firm's biggest lender - released a down-in-the-dumps report that basically said that weak demand plus continual expenses would lead to squeezed margins and a slim chance of even low single-digit profit growth among the top 200 law firms. 

And guess what: they were right. Today (September 13th) the firm issued a follow-up report on Biglaw confidence levels which tallies neatly with their previous findings. According to Citi, overall confidence levels were down seven points on their 200-point index, lying now at around 111. Of those 79 managing partners surveyed as part of the study, 17 per cent felt 'somewhat worse' than they did this time last year (about the legal sector, we're assuming, rather than just metaphysically). Equally, confidence in the demand seen and expected for legal services was down from 147 to 144, which was the index respondents showed the most confidence in. All this report really tells us is 'noose sales are up'.

So, why all the gloom? Not dogs, the economy. According to reports, the economy is not so hot at the moment, and hasn't been for four entire years. And while this isn't new - and the legal sector is not exactly expected to fold as a result of it - it means work is drying up, financing is down, and confidence in the sector is at a low. And all of this translates, according to Above the Law analysis, into flat end-of-year profit distributions. Bye bye Biglaw bonus.

"Unless something changes dramatically in the next few months, my guess is that both bonuses and profits will be roughly flat," said Above the Law's David Lat, who picked through the report and had to watch some Teletubbies and have an entire tub of ice cream afterwards just to gee himself up.

However, there is one bright spot nestled in among the report - lawyer hiring indices rose 12 points for equity partners to 130 and two points for associates to 137, so those legal professionals looking for a lateral move can still find a way to jump sideways into another firm. Jumping upwards on the ladder? Well, that's still a challenge, but one legal recruits can help you with.