In 2012, U.S. law firms experienced the greatest year-end revenue growth results since 2008, according to a preliminary survey released by Wells Fargo Private Bank Legal Specialty Group on January 28, 2013. The survey indicated that in 2012, law firms across the U.S. had surprising gross and net revenue growth of five and six percent, respectively, as well as an increase in profits per partner of five percent.
The Wells Fargo survey included confidential results from just over 100 law
firms — approximately 50 of which were in the Am Law 100 and 40 of which were in the Am Law 200. Further, the Wells Fargo survey yielded similar results to the preliminary findings of The American Lawyers’ own recitation of 2012 law firm finances, as reported by Law.com.
The head of Wells Fargo’s Legal Specialty Group, Jeff Grossman, postulated that the cause of the surge in revenue growth, specifically in the fourth quarter, included last-minute collections by law firms from clients that hurried to close deals in anticipation of the automatic tax hikes scheduled for January 1, 2013. However, Grossman’s theory is just that, and the precise reason for revenue growth in 2012 remains uncertain.
Grossman did caution law firms not to become too complacent in the upcoming year because of these results. While the law firms surveyed budgeted for an average of 3.8 percent revenue growth in 2013, to be successful at year-end, they must also continue to monitor their expenses. As Grossman told the Wall Street Journal’s Law Blog, “The reality is that 2013 is going to be under the same pressure as 2012. … The concern is if they take their foot off the gas pedal on controlling expenses, or stop focusing on productivity.”
Third party litigation funding may be just what a law firm requires to be successful in the New Year. Wells Fargo’s survey from November 2012 revealed that law firms are increasingly relying on financing to fund their operations, and that law firms utilizing lending services in 2012 was a third higher than in 2011. Using financing correctly can help a law firm have control over their expenditures, enabling the firm to better manage their cases and increase productivity, and as a result, improve the law firm’s revenue for 2013.
For more information regarding this topic, please visit the following sources:
Thomson Reuters
Wall Street Journal
Law.com
InsideCounsel
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