TMG's Take... on 2008 economic projections
A perspective on legal management issues from The McCormick Group

Can't decide whether we're in for the best of times or the worst of times? Neither can American Lawyer Media. Competing articles published on exactly the same day heralded gloom and doom and cautious exuberance. In Niraj Chokshi's article New Survey Shows Law Firm Leaders Gloomy About 2008, based on a survey conducted in the waning months of 2007 by Citi Private Bank's Managing Partner Confidence Index, managing partners express declining confidence in the economy. The article concluded that managing partners expect 2008 to be "a turbulent year".

In Summer Associate Forecast Brighter in '08, Petra Pasternak provides a more hopeful picture through her observations of summer associate hiring at major California firms where, in some cases, a bumper crop is anticipated. According to the Pasternak article, general practice firms with high degrees of diversification may not feel the pinch caused by the pop of the housing bubble or the contraction of the credit markets. One big-firm managing partner sums it up this way: "Generally, we haven't seen a recession that hit diversified firms significantly since the early 1990s," explaining that the dot-com bubble burst hit technology-oriented firms hard in the early part of the decade and that some New York securities firms are being buffeted by the credit storm. But for many other firms, Pasternak reports, 2007 was a good year, and firm leaders expect 2008 to bring more of the same.
 
So, caught in our Dickensonian conundrum, what are we to believe? Early reports from Am Law 100 and 200 firms seem to indicate a strong finish in 2007, with firms in a positive financial position going into 2008. Escalation in the compensation wars for first years notwithstanding, most firms we talk to are actively interested in bringing in laterals in targeted growth areas. Maybe the answer can be found in Chris Plummer's commentary, Five Signs We're Jawboning Ourselves into a Recession. In that article, published by Dow Jones's Market Watch, Plummer gets insights from organizational psychologist and San Francisco State University Professor Mitchell Marks regarding the herd mentality that takes over in assessing economic outlooks. Marks says, "If people get bombarded with a grim message, that herd grows bigger and stronger..because few of us want to be caught unprepared."
Plummer concludes we are being needlessly skittish. Perhaps recession really is in the minds of the media.
  
TMG's Take is a regular e-mail advisory produced by The McCormick Group. The company's Law & Government Affairs and Law Firm Services groups combine the expertise of more than 15 Consultants to help law firms fulfill all of their lawyer and administrative recruiting needs. TMG's Take covers topics across the spectrum of law firm management, including associate and partner compensation, growth strategies, marketing and business development, operations and facilities management, finance and accounting, professional development, and technology. Please direct all inquiries to Steve Nelson, Managing Principal, at 703.841.1700 or snelson@tmg-dc.com.