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Managing Partners Survey (continued from page 82) time but not on a partner track, actually de- clined in 2012. This year, 40.6 percent of re- spondents employed such a track in their firm, whereas 45.2 percent had done so in 2011. MERGERS AND EXPANSIONS Law firm mergers haven't picked up since the recession took hold, and they continued to slow down in 2012. In our 2010 survey, 25 percent of respondents had completed a merger in the previous year. In 2011, that number dropped to 16.1 percent. In 2012, the figure fell to just 6.3 percent. The number of firms interested in merg- ing in the next year has also dropped. While the majority of law firms — about 58 per- cent — are open to merger opportunities, those actively seeking a merger fell from 16.7 percent to 6.5 percent. Those firms not inter- ested in a merger grew from 30 percent to 35.5 percent. If firms were to merge in the coming year, their interest in markets in Pennsylvania and other East Coast cities has waned in favor of markets beyond the East Coast. And while 20 percent of 2011's respondents were open to mergers in foreign countries, none of this year's respondents answered so. A number of Pennsylvania firms did open in foreign countries in 2012. Many picked up law- yers from the disbanding Dewey & LeBoeuf and grew in places like London or opened in places like Almaty, Kazakhstan, or Moscow. New offices aren't on many responding firms' radar screens in the coming year. The number of firms that had opened in new loca- DOES YOUR FIRM EXPECT TO LAY OFF ANY ATTORNEYS IN THE NEXT YEAR? 18.8% Yes 81.3% No tions in 2012 fell to 21.9 percent from 25.8 percent in 2011. Firms that opened up new lo- cations looked to places like Houston, Alma- ty, New York, Pittsburgh and Wilmington, Del. Looking ahead, only 6.3 percent of re- spondents are thinking about opening in new markets in the coming year, compared to 20 percent who said the same last year. THE FINANCIAL PICTURE The majority of law firms were able to show improvements in revenue and profits when comparing their two most recent fiscal years, but the percentage that could show increas- es in those metrics dropped from last year. In 2012, about 62 percent of firms saw increases in revenue, while 10.3 percent saw declines and 27.6 percent held revenue steady year over year. In 2011, 70 percent of CONCERNING ALTERNATIVE BILLING, CLIENTS: respondents increased gross revenue and only 6.7 percent saw decreases. Firms that saw increases in revenue per lawyer dropped from 70 percent in 2011 to 60 percent in 2012. And in a bright spot for firms, only 50 percent saw costs increase as opposed to the 55 percent who said the same last year. A slightly better cost climate wasn't enough to hold profits at the high figures seen last year. In 2011, about 76 percent of firms were able to raise net profits, whereas only 58.6 percent were able to do so this year. The percentage of firms that saw net profits decline rose from 3.4 percent in 2011 to 17.2 percent in 2012. Profits per partner saw similar declines. While 72.4 percent of firms in 2011 saw in- creases in profits per partner, only 58.6 per- cent could say the same this year. The num- CONCERNING ALTERNATIVE BILLING, CLIENTS PREFER: 51.7% Still prefer hourly billing 34.5% Are eager to hear creative strategies 3.4% Come to us with creative strategies 10.3% Other 63% Flat fee for projects 18.5% Fixed fee plus outcome-based bonus 18.5% Task-based billing IN THE PAST YEAR, HAS YOUR FIRM LAID OFF ANY ATTORNEYS BECAUSE OF THE ECONOMIC DOWNTURN? 9.4% Yes 90.6% No DOES YOUR FIRM HAVE A DIVERSITY INITIATIVE? 75.9% Yes 24.1% No 84 | PaLaw 2012

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