AT THIS RATE… - Large law firms became more expensive to operate and less profitable in 2022, despite growing in terms of revenue and head count. While equity partners took home less money, associate and nonequity partner compensation continued to rise. Rate increases managed to keep gross revenue in the black as demand slid by nearly 2%. Still, the profit margin for The Am Law 100 fell 2 percentage points to 42%, wiping out the profitability gains of 2021 and putting firms below the average 2020 profit margin of 43%. “The margin on the billable dollar is contracting, and that is causing law firms to increase their rates, and that is why GCs are saying, ‘Hey, maybe we bring this work in-house,’” says Aon Law Firm Advisory Team manager George Wolf. Facing seemingly unavoidable increases in personnel expenses, law firms looked to technology for efficiency and real estate for cost savings in 2022. But despite realization rates holding strong, some observers told Law.com’s Dan Roe believe legal departments are at the end of their rope on rate hikes, prompting Big Law to get smart or shrink in the coming years.
OUT OF THE LOOP? - Law firms aren’t doing nearly enough to keep general counsel up-to-date on legal developments that could affect their company’s business, a marketing company found in a new survey of 100 GCs in the U.S. and U.K. The survey, conducted by Passle, a content marketing software company based in the U.K., found that only 8% of the 100 GCs and chief legal officers who participated believe that firms provide enough “timely, relevant content” for the market. However, they want that information, and 61% give priority to firms that keep them apprised of the latest industry developments and best practices. More than three-quarters of the GCs in the survey said they spend more than eight hours a week staying up-to-date on relevant information, and 100% said firms have a responsibility to keep their clients and prospective clients informed about news and developments. Connor Kinnear, chief marketing officer at Passle, told Law.com’s Brenda Sapino Jeffreys that he found it surprising that GCs spend so much of their time reading content each week—77% spend more than eight hours on that task. “That’s a full day,” he said.
