The financial year ended last week in the usual flurry of bill-chasing, but the mood was more relaxed than I’ve seen for a while.
It was certainly a whole lot happier than this time last year; the broad consensus is that most firms are expecting anything between a flat revenue performance to a drop of up to 10 per cent.
This is consistent with the performance of US firms in London.
As The Lawyer reported last month (12 April), revenue among the top 10 US practices in the City fell by an average of 12 per cent.
UK firms with April year-ends will also have benefited from four extra months of growing transactional volume, but it seems the big turning point was December 2009 – the first truly busy month since the recession – when law firms were reminded what it was like to be frantic.
A BDO survey of professional services firms out today (3 May) says that only 15 per cent of law firms are seeing turnover drops of over 10 per cent, with the majority predicting flat revenues. If that is so, it’s a remarkable feat of stabilisation; no wonder that three-quarters of law firms feel confident about 2010, according to the same report.
Such confidence is relative, of course. Firms have spent two years trying to nurse their profit margins, and that reduction in cost base has had
a human toll in redundancies.
Most managing partners have tried earnestly to be as transparent as possible with staff, but there’s no doubt that there is a vein of mistrust that persists among associates.
Some associates who had been at the top of their class all the way through school and university were suddenly deemed to be in the bottom 10 per cent of their cohort and thus expendable.
The bitterness felt by those who were made redundant will not yet have passed – a fact underlined by our lead story this week on the lawyer suing Eversheds for discrimination in its redundancy round.
The message I’m hearing from managing partners is that 2009-10 results will touch bottom. From here it’s all on the up, they tentatively predict, with restructured firms and reshaped partnerships.
Here’s hoping that the next government’s austerity budget doesn’t destroy that optimism.