The closely-watched research is gathered from data from 165
It shows average revenue growth of 4.8% for the first half of this year — the lowest average recorded since Citi started tracking quarterly results in 2001.
Meanwhile, law firms’ expense growth has remained high, driven by the continued increase in lawyer headcount.
Expenses grew by 10.1% in the first half of 2008 — driven by an increase in lawyer headcount, with law firms continuing to recruit despite a slowdown in demand.
Productivity, measured by average hours billed per lawyer, dropped by 5.5% over the first half with firms seeing a decline in demand for legal services.
Alfred Youngwood, Paul Weiss Rifkind Wharton & Garrison chairman, said: “I am not surprised by the results of the study. It confirms the informal conversations from people with strong securities and financing practices, that they were very slow in the first half.”
Those firms higher up the ranks have taken the biggest hit, according to the research, with firms that grew strongly between 2002 and 2007 more affected than their less profitable rivals.
Across 51 of the top 63 firms reporting results, PEP fell by 11.8% during the first half of this year compared with an 11.7% increase in 2007. In contrast, smaller firms only saw a 5.3% drop in PEP over the first half of 2008.
Top-tier firms saw greater profit margin falls than their peers, with revenue growth of 4.3% and an increase in expenses of 10.9%, compared with a 5.5% increase in revenues and a 9.1% increase in expenses at smaller practices.
Mike Francies,
