The legal profession could see green shoots in 2014, particularly law firms with global capacity. However, there will be no return to pre-2008 levels of performance as a fundamental shift has occurred in the legal marketplaces, leading to ’a changed and more muted environment for law firms.’  In an advisory report scrutinising global trends for the legal profession,  Citi’s Private Bank’s Law Firm Group in association with legal consultants Hildebrandt Inc, says the fundamentals for law have changed. Law firms have to ‘embrace and respond to a new reality.'  Acknowledging that many law firms have taken the steps necessary to cut back, the 2014 Client Advisory says the legal profession is at an inflection point where the supply and demand imbalance may begin to rebalance, leading to an improvement. 

Laser focus on efficiencies

Predicting that law firm profits will grow around five per cent in 2014, the advisory briefing expects ‘a laser focus on efficiencies, resulting in expenses growing at a slower pace than revenue, easing pressure on margins.’ 
The trend of careful equity partner headcount management will continue  - many  firms have already geared up by cutting back on overhead, investing in technology and increasingly concentrating on project and cost management. Also likely is a further reduction in the ratio of non-legal staff to lawyers and a continued focus on more efficient use of space to achieve cost efficiencies. Cheaper lawyers look set to stay with outsourcing arrangements and less expensive recruits doing lower quality work and a greater focus on technology.

Warning for senior lawyers

There is also a warning for senior lawyers – with a prediction that as these more senior categories lag behind associates in productivity and, in some cases, profitability, firms will undertake a deeper examination of the performance levels of income partners, counsel and of counsel – with decisions being taken to reduce their numbers where their contribution to profitability is low or negative.

Emerging global middle-class

One reason why the global demand for legal services will grow as a result of the emergence of middle class societies in emerging markets and the increasingly global nature of business, the report states.