Los Angeles, CA LawFuel.com – Best Law Firm Newswire Service September 05, 2013
Operators in the Law Firms industry range from sole practitioners to full-service legal firms serving mostly corporate clientele. The industry experienced declines in revenue-generating activities as a result of the recession. Several factors contributed to a drop in industry revenue in 2009: a turn down in initial public offerings (IPOs) and mergers and acquisitions (M&As) weakened revenue for the industry’s top firms, which receive the bulk of their revenue from major corporate clients; a drop in business formation shrunk the overall pool of clientele for law firm services; and a plummeting real estate market cut business for firms specializing in real estate law. Fortunately, a pickup in counter-cyclical work, which includes legal advice regarding restructurings and bankruptcies, helped mitigate further revenue declines. “Since the recession, the Law Firms industry’s recovery has been modest, due to cost-weary businesses holding back on pursuing outside legal counsel,” reported IBISWorld industry analyst Stephen Morea. In the five years to 2013, industry revenue declined slightly at an annualized rate of 0.1% to $265.6 billion.
However, industry revenue is expected to increase in 2013. As the economy continues to improve, the industry will benefit from higher corporate profit margins and increased corporate activity. Industry revenue has also increased thanks to growth in practices related to M&A and IPO activity and greater demand in labor practices and niche practices tied to high-growth sectors like technology and healthcare. Corporate litigation, which represents a sizeable portion of industry revenue, failed to show significant growth in recent years, but thanks to a stricter regulatory environment (domestic and internationally), this segment of the Law Firms industry should see improvement in 2013.
Industry revenue is projected to increase in the five years to 2018. “The overall performance of the economy, an anticipated increase in corporate profit and an influx of new laws and regulations will aid revenue growth in the next five years,” says Morea. Expected increases in disposable consumer income, will also aid smaller industry participants, increasing demand for services like estate and trust planning. In addition, improving investor confidence will stimulate more activity in M&A and IPO markets, facilitating higher demand for corporate legal services.
The Law Firms industry is highly fragmented, with the majority of operators being small- and medium-size firms. Industry attributes indicate a low level of concentration. In the five years to 2018, market share concentration, among the industry’s largest law firms, is expected to increase marginally because of high anticipated merger and acquisition activity. Since the mid-1990s, merger activity has risen, with a number of major firms merging with entities in the United Kingdom and Europe.
For more information, visit IBISWorld’s Law Firms in the US industry report page.
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IBISWorld industry Report Key Topics
The Law Firms industry comprises offices of legal practitioners, known as lawyers or attorneys, who primarily practice law. Establishments provide expertise on a range of areas or specific areas of law, such as criminal, corporate, family and estate, patent, real estate or tax.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.