Editor's Comment: Confidence tricks
Confidence is a funny thing. In business there is often too much of it, leading to bull-market excess, or too little, causing self-destructive flagellation. It is also another established rule that sentiment undershoots and then over-reacts before finally levelling out at somewhere near reality. It is a theory that you can apply to law firms. Legal Week's quarterly business confidence poll last October, the first since the onset of the credit crunch, showed confidence bizarrely unchanged from boom-time levels, despite a string of gloomy headlines. By this month's poll, conducted days after the fire sale of Bear Stearns, confidence had plunged across the board. Yet the same poll finds partners more bearish about the prospects for legal services as a whole than their own firm. And talk to managing partners privately and it is clear that there are plenty of major firms still predicting solid growth for 2007-08. This suggests that confidence is as much being defined by outside factors as firms' individual experiences, though no one disputes that the market has slowed considerably.
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