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Law Firm Leaders Turn Bearish on U.S. Economy in 2020

Jan. 13, 2020, 8:28 PM

Law firm leaders have lost confidence in the U.S. and global economy, but that hasn’t translated into a gloom-and-doom outlook for their own businesses, according to a new survey released by Citi Private Bank.

The index of managing partners’ confidence in the U.S. economy dipped 18 points, bringing it into negative territory. The law firm leaders were even more pessimistic about the global economy.

But they expect their own businesses to fare better than the broader economy. The latest edition of the biannual survey showed only minimal downward revisions on expectations for revenue, demand, realization, and net income. And the leaders expect growth in headcount across equity partners, non-equity partners, and associates.

Gretta Rusanow, head of advisory services for Citi Private Bank’s Law Firm Group, said law firm leaders she spoke with during the fourth quarter expressed concern that time was running out on U.S. economic growth after a long period of expansion.

“There were a lot of positive signs in the market, yet I was getting the sense across the market that firms felt like we were ready for a recession,” Rusanow said. “And I think that’s what you’re seeing reflected in here.”

Citi’s confidence index in the U.S. economy fell to a score of 87 from a previous level of 105. A score below 100 indicates a lack of confidence.

The confidence gauge for the global economy fell 17 points to hit 76, with 49% of respondents saying they expected the first half of 2020 to be “somewhat worse” than the previous six months.

Leaders are more bullish about their law firms. Only 8% of respondents expect revenue to decline over the next six months, while 36% expect top-line growth between 2% and 4.9%. Another quarter of respondents expect revenue to grow by less than 2%. Only 8% expect revenue declines..

A somewhat similar dynamic occurred in the first-half survey for 2019, when managing partners dimmed their expectations for the U.S. and global economies while they maintained a business-as-usual outlook for the legal sector.

That pessimism largely proved unwarranted as law firms recorded fairly healthy 2019 financial results. While major reports on the industry from the likes of Citi, Wells Fargo, and AmLaw are yet to be released, a recent Thomson Reuters survey said fees were expected to have risen 5% thanks to healthy rate increases and slight demand growth.

Rusanow attributed the dissonance to a “positive bias” among law firm leaders that she said has been evident in previous surveys.

“If you thought you were a firm that was going to see a contraction, then what would be the motivating factor in going to work?” Rusanow said. “It’s almost rational behavior that you would be optimistic about your firm’s growth even if you think the overall conditions aren’t great.”

To contact the reporter on this story: Roy Strom in Chicago at

To contact the editors responsible for this story: Jessie Kokrda Kamens at; Rebekah Mintzer at