It was this time last year when began to learn how profitable law firms had been in the first year of the pandemic. That profitability cast a completely different light on the historical law firm pressure to work long hours in the office.
Therefore, I looked forward to this year’s Thomson Reuters report. There are many terrific charts in the report. Below I’ll highlight three charts, mainly to encourage you to read the entire report. You can find the report here.
This could be called “The Money Chart” in the legal market, growth in Profit Per Equity Partner (PPEP). Growth in 2021 was quite healthy, even compared to the robust growth in 2020. Mid-sized firms lead with 22.4% rolling 12-month growth.
The strong demand in legal services lead to the high turnover rate, especially amongst associates. The associate turnover rate for all firms reached 23.2% across all firms. For Am Law 100 firms the turnover rate hit 23.7%. See the report for a chart which breaks this out by firm size.
For Big Law firms “facing the retention crisis,” there was nowhere to go but up. Associate compensation rose by over 15% in the Am Law 100.
There is so much more in this report, including:
- Lawyer head count growth
- Hours worked per lawyer
- Expense growth and overhead detail (recruiting, staff compensation, KM, and technology lead)
- Demand growth by practice
The report navigates “managing the way back” and lists specific, actionable recommendations. A new, essential approach for law firms: “flexibility.”
I encourage you to download the “Thomson Reuters Institute and Georgetown University Law Center on Ethics and the Legal Profession: 2022 State of the Legal Market Report.
In case you are wondering, I am not associated with either entity. I like data and thought that many of you would find this data interesting, too.