Posted in Latest News on 10 Jan 2024
In the UK and the United States, 2023 was a year of ups and downs for the legal market.
While some forecast a slow recovery for certain sectors after the pandemic, rising inflation, and high interest rates, transactional practices such as litigation, regulatory investigations, and restructuring practices predict a strong 2024. So, might this be the year for transactional practices to bounce back strong?
This news, coming off the back of a 2024 Client Advisory from Hildebrandt Consulting and Citi’s Global Wealth at Work Law Firm Group and reported by The American Lawyer, does come with one slight caveat – that there may be a small dent in profits due to pay raises. However, a more stable market will allow transactional firms to grow much more than in the last couple of years, when high interest rates and climbing inflation curbed the market, especially in the wake of the war in Ukraine. While the third quarter of 2023 saw revenue and expense growth rising by 4.8% and demand dropping by 0.7%, the report states that early indications are that the final quarter of 2023 will see these figures grow, increasing even further in 2024. While this year won’t see massive growth overnight, like that seen during 2021 and the beginning of 2022 as the world reopened in the aftermath of the COVID pandemic, it will see modest profits. Growing salaries also shouldn’t eat too much into this either. With reports that the US Federal Reserve plans to cut rates next year to compensate for a more stable market, the forecasts for this area look much more positive.
The report is a little more cautious in terms of growing the number of people at firms. It states that most head-count growth in 2024 is expected to come from lateral moves and internal promotions, and for smaller and more regional firms, mergers may be the best way to grow. The report says that firms are looking to catch up on growth that they may have missed out on during the more turbulent market conditions of the last couple of years or a need to absorb costs. The report states that 81% of firms want to grow through promotion, while 79% are looking at lateral accusations. It’s clear that, for most firms, retaining talent is high on their list of priorities, and they will be looking to promote them first and foremost to keep them on staff and grow in scale. The report also connects lateral moves with remote working, stating that partners no longer feel as connected to their firms. Firms, therefore, may move towards bringing people into the office four days a week to try to strengthen this connection and stop partners, significantly, from jumping ship. Firms seem to be backing this up, with few saying they plan to reduce office space this year. Some even said they were planning to increase office space in the future. It’s clear that firms are looking to keep staff in-office and on staff as a primary focus.
Overall, the US transactional market looks to rebound after some years of variable conditions under which they have been operating. Early forecasts look good, and several firms are optimistic about 2024. There is plenty to be excited about, and we will keep an eye on this market with great interest in the year ahead.