Law firms are markedly more confident that they will achieve their annual financial objectives this year than they were in 2020. While last year was unique in many aspects, 2021’s improving economic conditions, in addition to more stable billable hours, are likely the biggest contributing factors to this increased optimism.
According to Bloomberg Law’s 2021 Law Firm Benchmarks Survey, 82% of respondents are at least somewhat confident that their law firm can achieve its financial goals for the year, as opposed to 62% of respondents to the 2020 Survey—a 20 percentage-point increase.
Delving further, the numbers are even more remarkable: While slightly more than 15% of respondents to the 2020 survey said they were “very confident” their firm could reach its financial goals, close to 50% of 2021 respondents described themselves as “very confident.” Why the surge?
For starters, the perfect storm of a pandemic, a recession, civil unrest, and a contentious U.S. presidential election likely dampened law firms’ overall economic prospects (real or perceived), impacting respondents’ confidence in their firm achieving their financial goals.
But actually, firms performed better than originally anticipated in 2020. As the economy heated up in early 2021, some surviving businesses likely generated revenue closer to their pre-pandemic levels, making it easier for firms to pay, and in some cases increase, billable hour rates, potentially contributing to respondents’ brighter outlook.
Other plausible reasons beyond the rebounding engines of commerce are consistent law firm billings throughout the pandemic and clients’ expectations that bills would not be reduced despite the work-from-home pandemic culture.
The sharp increase in law firms’ financial confidence indicates that law firm morale may be swiftly improving as the nation reopens and the economy recovers. Even with the current resurgence of the pandemic, with no discernible decrease in billable hours or increase in clients’ belt-tightening to worry them, law firm lawyers are poised to remain financially confident for the rest of the year heading into 2022.
Bloomberg Law subscribers can find more information about Law Firm Benchmarks on our Surveys, Reports & Data Analysis page.
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