Litigation Practices Showing Signs of Life, Says Hildebrandt Study

Karen Sloan

The National Law Journal

Is the long anticipated litigation boom finally here, more than a year after the financial crisis hit?

"Boom" might be too strong a word, but the latest Hildebrandt International Peer Monitor index indicates that litigation demand increased by 1.8 percent during the first three quarters of 2009 compared to the last three quarters of 2008. The index, released on Monday, tracked demand for legal services, attorney productivity, billing rates and direct and overhead expenses at large and midsize law firms.

The findings seemed to substantiate a 2009 litigation trends report released on Oct. 15 by Fulbright & Jaworski. That firm surveyed corporate general counsel and found that 40 percent expected litigation to increase during the year ahead.

Conventional wisdom holds that litigation surges in tough economic times, yet litigation has held fairly steady during the past year, largely because clients have been reluctant to spend money on lawsuits.

Hildebrandt’s previous Peer Monitor index -- which focused on the second quarter of 2009 -- found that litigation demand had lagged 5 percent behind where it had been one year previously. By contrast, the new index indicated that intellectual property litigation, for example, increased by 1 percent after falling off sharply earlier in the year.

"Demand for law firm services is displaying some signs of stabilizing, while rate growth remains mixed," the index concluded. "Whether the legal market actually bottomed out earlier in the year or not, the economic backdrop remains challenging and any improvement appears to be gradual and uneven."

Bankruptcy remained the most in-demand practice area, increasing by 18 percent compared to the first three quarters of 2008. Transactional practices including mergers and acquisitions, capital markets and real estate continued to struggle.

The legal markets in some cities fared better than others, the index found. Overall demand for legal services in Chicago grew by 2.4 percent, while demand in New York, San Francisco and Washington remained flat. Philadelphia was the weakest market, posting a 3 percent decline in overall demand for legal services.