by Ken Lopez
Founder/CEO
A2L Consulting

When it comes to the economy, we have come so far since 2009 that it's not hard to be a bit optimistic. Of course, measuring from that historic trough can make anyone feel better. The real question is whether the economy is going to continue to improve from where it is now.

I evaluate the economic future not only to exercise my long-ago-earned-economics-degree muscles but to do some serious planning. Since I believe that large-scale litigation spending is closely tied to the economy's overall health and because most of my business life is closely tied to litigation, I watch leading economic indicators quite closely.

Last year at this time, I wrote about my affection for a particular leading indicator. In fifteen years, it has never let me down, as it accurately predicts the economy about 8 months in advance.

ECRI's Weekly Leading Index is a wonderfully simple indicator. When it goes up, it's generally good, and when it goes down, it's normally bad. Unfortunately, I don't like the direction it is headed in now.

At the end of 2012, the indicator was moving in the right direction - up - suggesting economic growth was ahead. That's what we got, although economic growth has been quite modest (only a bit over 2%) in 2013.

Looking at the ECRI chart below, the green line is the weekly FORECASTED economic growth rate looking about 8 months into the future from the date noted on the bottom. For example, the chart says that growth was forecasted to peak late this summer (February plus ~8 months) and that roughly 8 months from November 2013 (summer 2014) we will be experiencing our slowest growth in years. The blue line is the ACTUAL growth rate in real-time.

In trial support, it's been a challenging year. Perhaps the best known firm (that isn't us) in our industry, reportedly laid off half of its staff and was sold yet again. Another big brand is quietly up for sale (also not us), and while we have had some major wins, earned many new clients and we're currently engaged on some of the largest cases in the world, we have not had a record growth year as we have in recent years. Although Citi is reporting optimism today in a subjective survey, my law firm managing partner friends have a similar outlook to mine.

At A2L in 2014, we'll be hiring, we're investing in some new breakthrough products and we expect growth, however I expect that we will be doing all of that in moderation. We will no doubt continue to expand our litigation-focused alternative fee arrangements and participate in even more litigation support preferred vendor (discount) programs.

The dials at the top of this article are a dashboard also from ECRI that summarize the economic growth outlook (green) and the inflation forecast (red). The arrows that are shaded reflect a snapshot of the changes in the forecast over time. You'll note that there is very little movement which suggests rather stagnant conditions similar to what we have right now going forward. It's not that a recession is forecast. Rather, it's just that very moderate growth is forecast.

2014 will likely be a year where most litigators and litigation support firms are working much smarter and just a tiny bit harder.

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