Revisit economic drivers to enhance profitability
Abstract: Despite the potential for growth in countercyclical practices such as bankruptcy, the recession is having a negative impact on demand for legal services. It’s also handcuffing most firms from making up for lost business by raising rates. So just maintaining profitability, let alone increasing it, is a struggle this year. In fact, in their January 2009 Client Advisory, Hildebrandt and Citi Private Bank projected very modest law firm revenue growth of only around 3% for 2009, with some firms likely experiencing flat or even declining growth. This is a rather bleak picture, but the good news is that your firm likely has ample opportunities to enhance its profitability. You simply need to revisit your economic drivers. This article discusses expenses, leverage, utilization and realization.