Law ;firms ;across the market are bracing themselves for a gloomy 2009, with even the most optimistic ;managing partners admitting that the outlook is bleak.
At the beginning of this year firms were banking on geographic diversification as a means of mitigating tumultuous ;market conditions (The Lawyer, 7 January 2008). Now they are facing the reality that no market will escape the ravages of recession, with cost-cutting and consolidation set to be the key themes of the year ahead.
Allen & Overy senior partner David Morley said: “The global economy is suffering a severe heart attack and is undergoing resuscitation from policy makers.
“Regrettably, I foresee much tougher times for many law firms. More consolidation of law firms in the US and UK markets seems likely as the industry tries to reduce overcapacity.”
Cost-cutting has already begun in earnest; so far more than 1,000 legal jobs have been cut across the UK’s top 100 firms. US firms have also been hit
with redundancies, with Cadwalader Wickersham & Taft and Orrick Herrington & Sutcliffe among those to have laid off lawyers.
Orrick chairman Ralph Baxter said cost management will become an even greater priority next year.
“Clients will be more demanding about how firms are managing cost,” he
said. “This will mean firms will be more stringent on expenses. We want to further advance innovative ways of billing.”
Some law firm chiefs, though, are less pessimistic. Herbert ;Smith ;senior partner David Gold and SJ Berwin senior partner Jonathan Blake are both hopeful of an upsurge in M&A work towards the end of 2009.
Blake said: “I’m an optimist. I think that somewhere towards the third quarter of next year there’ll be vendors who’ll have adjusted their expectation of prices and we’ll see opportunities in the M&A and real estate markets.
“I think this financial year will be the bad one and the next one ought to be better.”
Despite this cautious optimism from some quarters, Addleshaw Goddard managing partner Mark Jones summed up the general feeling in the market when he said: “If we make last year’s revenue I’ll be dancing in the street.”