Law Firm Leaders Survey 2012: Vote of Confidence
Despite uncertainty all around them, law firm leaders are optimistic about the year ahead, our annual survey shows.
A majority of respondents (58 percent) said that their firms carry bank debt and other third-party debt, but generally their use of it was conservative. Sixty-six percent of respondents whose firms carried third-party debt said that it totaled $10 million or less, and 78 percent indicated that the debt represented no more than 5 percent of total assets. Thirty-six percent of respondents whose firms carried debt said that they borrowed less in 2012 than in 2011.
Generally, firms appeared to be prudent about their debt. Only three respondents put their firm's debt at more than 15 percent of total assets. "Even though interest rates are low, there is a general uneasiness in having a significant debt load," says Bruce McLean, chair of Akin Gump Strauss Hauer & Feld. Several managing partners said that as a result of Dewey & LeBoeuf's collapse, their partnerships and, especially, potential laterals began to attach greater importance to healthy balance sheets.
But despite the challenges, most respondents said they expect their firms to post increases to their bottom line in 2013. Nearly 32 percent expect partner profits to grow at their firm by more than 5 percent, up from 26 percent who said growth would top 5 percent a year ago. Forty-five percent expect profits to increase by 5 percent or less in 2013. "There's reason to be cautious, but we are growing," says Proskauer's Leccese. "We have some really busy practices, and we expect to be profitable."
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