Time will tell, but lawyers account for more than half of the work referred to business valuation firms, according to BVR’s 2009 Business Valuation Firm Economics & Best Practices Survey. In fact, more than 25% of the firms surveyed received more than 75% of their work from the legal market. Thus, the latest news on law firm economics suggests that now may be the time for BV experts to revisit and strengthen such relationships.
Consider: The recently released 2009 Am Law 100—The American Lawyer magazine’s annual survey of the nation’s top grossing law firms based on fiscal year 2008 financial performance data—reveals that last year was The Am Law 100’s worst in 17 years. Indeed, major law firms continued to expand and hire aggressively last year, even as the economy and the demand for high-end legal work (especially in the corporate and finance sectors) hurtled towards a precipice.
As a result, both average profits per partner and average revenue per lawyer dropped last year for the first time since 1991, setting the stage for massive law firm layoffs that began late in 2008 and have continued throughout 2009 as firms struggled to bring staffing and costs into equilibrium with a recessionary economy.
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