On the bright side...LOL:
Bankruptcies help keep profits up at US law firms
Friday April 11, 3:45 am ET
By Christopher Bowe in New York
Fee income for the largest US law firms rose 6.5 per cent on average last year, while many of their clients in corporate America saw profits and share prices fall steeply.
Amid cost cutting, lay-offs and hiring freezes, the top 200 US law firms saw average profits per partner - equity holders in the firms - rise 8.5 per cent last year.
This comes as companies comprising the Standard & Poor's 500 struggled to increase profits. Earnings for constituents of the S&P 500 increased 0.1 per cent last year compared with 2001, according to Thomson Financial/First Call.
The S&P stock index fell about 20 per cent last year.
Law firms have been hit by the significant decline in capital markets business, including mergers and acquisitions, securities placements and other financial business.
This was offset, however, by business in bankruptcies and restructuring, and litigation, especially practices with product liability and intellectual property litigation.
Cost cutting also played an important role.
Nevertheless, the seemingly unassailable rise in law firms' profits contrasts with the overall woes in the US economy and some of its largest corpora-tions.
One attorney said of the perceived disparity: "2002 was a year in which many of our clients basically slashed people by the 10s if not 100s of thousands."
Revenue for top US law firms is expected to increase 5 per cent this year. Profits per partner is estimated to increase 3 to 5 per cent.
The forecasts for this year and results from last year stem from a Citigroup report on US law firms' financial performance, said a person familiar with the report.
Citigroup is a lender to many of the top US law firms. In that role, it receives audited financial statements from many top firms, from which it can derive a picture of the US legal industry.
Its report is based on a survey of the top 200 US law firms, from which it received responses from 141.
Concerns about the high level of fees charged by corporate lawyers was highlighted last October after a group of Clifford Chance's lawyers in New York used an internal memo to accuse the firm of encouraging padding billable hours.
They charged that the firm sought to inflate billable time to clients in its annual target of 2,420 chargeable hours.
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