NEW YORK--(BUSINESS WIRE)--Citi Private Bank Law Firm Group and Hildebrandt Consulting today released their 2019 Citi Hildebrandt Client Advisory, which establishes the broad landscape for the law firm industry, how firms are responding to industry challenges and their best opportunities for growth in the year ahead.
Based on Citi data compiled in this year’s Client Advisory, the U.S. law firm industry is poised to see the strongest year of top line growth for almost a decade in 2018 and 2019 is expected to be another good year with top line growth. Projected profit per equity partner growth is expected to increase in 2019.
Market dispersion and volatility are also expected to continue in 2019, potentially causing accelerated consolidation of the industry, particularly in the Am Law Second Hundred.
The Client Advisory indicates growth in the industry has been concentrated in the largest and smallest firms during 2018, suggesting firms with strong reputations and differentiated brands are being favored in the market, regardless of their size – and this trend is expected to continue in 2019.
An additional key finding of this year’s Client Advisory is that with an expected acceleration in equity partner retirements in the coming years, firms could face a shortfall in their permanent paid in capital. Law firms will need to continue to invest in talent development over the next ten years to ensure these equity partners and their paid in capital can be replaced.
“This year’s Client Advisory describes how we believe the most successful firms in 2019 will outperform the market by maintaining focus on profitable growth and delivering what their clients need. We expect firms will do even more with pricing, project management and leverage models to stay competitive. They will be following growth strategies that build on their market strengths while protecting their firms’ culture,” said Gretta Rusanow, Head of Advisory Services, Law Firm Group at Citi Private Bank. “As lateral activity is likely to remain aggressive and partner retirements are likely to accelerate in the coming years, it will also be important for firms to focus on institutionalizing clients.”
“We are optimistic about 2019 and do not anticipate a downturn in the industry. When the inevitable downturn does occur, the biggest expense management opportunity for firms will be to study whether the composition of their leverage models makes sense from a profitability standpoint,” explained Brad Hildebrandt, Chairman of Hildebrandt Consulting. “That said, experience tells us that law firms are typically quick to recover from economic downturns, so long as their internal fundamentals are sound.”
This year’s Client Advisory also included research about “price elasticity of demand” in the law firm industry between 2010 and 2017. The research found that demand growth was determined more so by brand than price, and that clients remain willing to pay higher rates for the legal services they receive and regard as the most valuable.
The 2019 Citi Hildebrandt Client Advisory draws from data collected from a sampling of primarily U.S.-headquartered law firms by Citi Private Bank. For firms headquartered outside the U.S. and third-party providers of legal services, the information is mostly anecdotal. For third-party providers of legal services, our information is mostly anecdotal. Sources include the “Citi Annual Survey Database” of 191 U.S.-headquartered firms, including 45 Am Law 1-50 firms, 33 Am Law 51-100 firms, 45 Am Law 2nd 100 firms, and 68 additional firms; the “Citi Flash Survey”, including 41 Am Law 1-50 firms, 29 Am Law 51-100 firms, 48 Am Law Second Hundred firms and 49 additional firms; the “Citi Law Firm Leaders Survey” of 55 large firms headquartered in the U.S., UK, Australia, China and India; and the “Law Firm Leaders Confidence Index,” which reports the forward-looking opinions of law firm leaders from 156 U.S.-headquartered firms.
The full report can be accessed via the Citi Private Bank website here.
About Citi Private Bank:
Citi Private Bank is dedicated to serving worldly and wealthy individuals and families, providing customized private banking across borders. With approximately $390 billion in global assets under management, the franchise includes 48 offices, serving clients across 130 countries. Citi Private Bank helps clients grow and preserve wealth, finance assets, make cash work harder, safeguard assets, preserve legacies, and serve family and family business needs. The firm offers clients products and services covering capital markets, managed investments, portfolio management, trust and estate planning, investment finance, banking and aircraft finance, as well as art and sports advisory and finance.
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
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About Hildebrandt Consulting:
Hildebrandt Consulting is continuing its long and distinguished history as the preeminent global consulting firm in the legal profession. With clients in over 15 countries, Hildebrandt has built up unmatched expertise in every aspect of professional firm management. Our reputation for helping firms arrive at strategic solutions comes from our knowledge of the interdependent elements that contribute to overall business performance.