Update, 9/12/12, 12:25 p.m. EDT: The third paragraph of the story below has been updated to reflect the demographics of the survey respondents.
Though managing partners remain relatively upbeat about the demand for legal services, concerns about the health of the broader economy are making them a bit more pessimistic about their business than they were earlier in the year.
That’s one of the messages contained in the Law Watch Managing Partner Confidence Index survey released Tuesday by Citi Private Bank’s Law Firm Group. The survey, which covers the second quarter of the year, asked 79 firm leaders about their overall confidence, as well as their confidence in nine specific areas. The answers are plotted on a 200-point index, with 100 representing a neutral opinion and 200 representing full confidence.
For the second quarter, firm leaders put their overall confidence level at 111, a 7-point dip from the first quarter of the year. Seventeen percent of those surveyed said they felt “somewhat worse,” 28 percent said they felt “somewhat better,” and 46 percent said they felt “the same.” Confidence in demand for legal services was also down slightly—from 147 in the first quarter to 144 in the second—but still remained the area in which managing partners expressed the most positive outlook. (According to Citi, the respondents were leaders at 27 Am Law 100 firms, 22 firms falling in the Second Hundred, 22 firms too small for those two lists, and three firms headquarted in the United Kingdom.)
The survey’s economy-at-large metric saw the steepest decline, dropping 19 points to 107. The profit index held steady at 101, and lawyer hiring indices rose by 12 points for equity partners, to 130, and 2 points for associates, to 137. The full executive summary is viewable here [PDF]. Gretta Rusanow, a senior client adviser with Citi’s law firm group, was not available to elaborate on the results Tuesday.
Without commenting specifically on the Citi survey, Michael Heller, the president and executive partner of Philadelphia-based Cozen O’Connor, said Tuesday that while he and his colleagues hear the message consultants often tell them—that confidence is down and expenses are rising faster than revenues—Cozen is nonetheless having a good year.
“Does the economy have an impact on certain practice groups within the firm? Of course it does,” Heller says. “But overall we have a very unique and diverse practice mix which seems to do very well in a mixed economy.” In 2011, Cozen had gross revenue of $294 million, up from $277.5 million the year prior, making it the 100th-highest-grossing firm in the country on the most recent Am Law 100.
The Citi survey’s five-year trend lines show that its various indices are significantly higher now than they were when the industry hit its nadir at the end of 2008, but lower than they were at the start of 2010. Over the past two years, managing partners’ confidence has generally bounced up and down in all of the survey’s categories.