There’s good news and bad news for your outside counsel. According to a recent survey, cited by Bloomberg’s Big Law Business blog, large law firms are more profitable than ever. But there’s a downside: They’re having more trouble collecting fees for their work.
The report Bloomberg cites comes from Wells Fargo Private Bank’s legal specialty group. It surveyed 132 firms and found that revenue grew 5.3% through the first half of the year. Wells Fargo says that while law firms might not shatter revenue records this year, they are doing quite well. Bloomberg says it jibes with other surveys this year: Citi Private Bank’s survey said revenue grew 4.1% from a year ago and Thomson Reuters Peer Monitor Index said demand among the Am Law 100 rose 1.6% quarter-to-quarter.
But unfortunately for the firms, collections are off. Wells Fargo said realization rates fell half a percent from the prior year. Thomson Reuters said firms collected 89.2% of the bills clients had agreed to pay, which was at least the third consecutive quarter of declines. Citing a lengthening collection cycle and pressure on margins, Citi noted that “collecting on increased inventory levels will be key.”