LAW FIRM BILLING - THE ICEMAN COMETH: Citigroup Private Bank recently conducted a study of law firm finances. The study found that, while billing rate increases accounted for two-thirds of law firms' 2004 revenue gains, they increased at a slower pace than in the prior year, forcing private practice firms to rethink their future growth strategies. Though corporate clients are forever scrutinizing their legal bills and demanding write-offs, law firms by and large have routinely gotten away with 6 percent to 8 percent rate hikes, even in a tepid economy. According to Corporate Counsel however, those days may be finally coming to an end.

In private conversations, general counsel at Fortune 100 outfits readily admit such penny-pinching is quickly set aside in bet-the-company cases. It's the other 99 percent of private-practice lawyers that have tough choices to make, warned the Citigroup study, which was based on the financial performance of 143 law firms across the country and is considered a top indicator of the state of the legal business. For more-run-of-the-mill work like licensing, trademarks and insurance defense, where specialization and prestige play a lesser role in the outcome, cost-cutting pressures will exact the highest toll, according to the study's analysis.