Commentary: What history says will happen to firms' financial results in 2009
How do you gauge the performance of law firms in any given year? For what it's worth, at Legal Week our starting point is historical data. The early-1990s recession isn't much help, as figures back then were comparatively scarce, and firms were totally different animals. But there are reliable numbers on major firms from the previous decade. Looking back at the last cyclical downturn, we can get a sense of how the top 50 perform in slower deal markets. In 2001-02, the group as a whole saw revenue growth slow to 8.6%, while average profits per equity (PEP) fell 0.9%. In 2002-03, revenue growth slowed to 5.1%, while on average profits fell 1.1%. Revenue growth was at its slowest the following year, at 4.6%, but by then firms had cut costs, so profits rose by 6%. From 2004, the market took off.
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