Peer Monitor Index Rises on Corporate and Transactional Work
The Peer Monitor Index for the first quarter of 2014 is out and the report found healthy growth in transactional practice areas. The report pointed out the that demand for the services of large law firms went up almost by 0.9% reversing the decline witnessed in the last quarter of 2013. Also in a departure from last year's trend, transactional work this first quarter was better than in the previous year, which was beset by sequestration issues.
The report noted that 2014 has "the potential to be a year of modest acceleration," if things work out properly. Despite otherwise hopeful signals, expenses continued to increase while collected realization fell to 83.5% reaching an all-time low in the first quarter. Even though due to cost-cutting measures, overhead expenses had continued to decline across 2013, in the first quarter this year, overhead expenses rose by 2.5% - the highest level in the last four quarters.
Across practice areas, litigation fell by one percent, patent litigation went down by 1.1 percent, labor and employment work fell by 1.4 percent, while bankruptcy work fell by 5.9 percent. In contrast, several practice areas saw modest to good growth. Tax work went up by 6.7%, corporate work was up by 5% and real estate witnessed a growth of 3.7% - its fourth consecutive quarter of growth.
The report found growth in transactional work a lifesaver for law firms in a market where litigation-related practices comprise almost 40% of total law firm billings, and showing little chance of improving. The rise in transactional work including both corporate and real estate work provides a strong signal for growth of overall law firm demand.
The report authors did not definitively declare the reason why they saw 70% of PMI firms witnessing growth in transactional work in the first quarter, however, they opined that clients may perceive less differentiation in the perceived quality of service between law firms when it came to transactional work.
The PMI report observed further that "2014 has gotten off to a fair start, with steady, if unspectacular growth, improving rates and productivity, and a more optimistic outlook for the overall economy." However, the report observed, the major questions pertain to finding out the degrees and patterns of shifting demands in legal services, both due to cyclical patterns as well as due to the entry of new competitors.
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