Each year, I watch for the Thomson Reuters Report on the State of the US Legal Market. No entity has a broader look at the legal market than Thomson Reuters. This report is the best source for data on growth and trends in the US legal market.
Here I focus the report’s data on law firm economic performance and demand data.
Legal market historical demand growth
After the roller coaster since COVID, legal saw two years in a row of growth. In 2024, demand growth was up 2.6%, which is strong. From 2007 to 2023 annual demand growth averaged 0.1%. The 2024 increase is on top of the 0.8% growth in 2023. The strongest year in recent history was 2021 at 3.7%. Of course, the 2021 growth was in part due to the negative demand growth of -1.6% in the peak pandemic year of 2020.
Practice demand growth
Nearly every practice group saw an improvement in demand. Bankruptcy saw the largest decrease in demand. The counter-cyclical practice of Litigation lead with 3.3% year-over-year growth. The other large practice, Corporate, experienced a recovery with 2.0% growth while Labor grew 1.9%. Litigation, Corporate, and Labor are the three largest practices in US Legal. Their growth helped to float the overall market.
Worked rate growth
Ah, yes, the annual law firm billing increase. Law firm billing rates increased by an average of 6.5%, which is the fastest growth rate since the fiscal crisis of 2009 to 2010. Am Law 100, Am Law 200, and mid-sized firms all experienced bill rate growth. This is real growth, beyond the rate of inflation.
Per TR, the increase in rate growth may be related to a recent hiring trend. For the past two years firms have focused more on hiring experienced laterals and less on new associates. An increase in the percentage of non-equity partners and decrease in the percentage of associates may account for some of the growth. Changing law firm composition is an interesting topic throughout the report which I do not cover fully here.
Profit per lawyer growth
One of the most prized metrics in legal is Profit per Lawyer (PPL). 2022 was a poor year for PPL. Firms stopped the pain in 2023. In 2024 firms returned to nearly the same PPL as during the transactional practice boom of 2021. In the report, TR says that PPEP (profit per equity partner) was even higher, above 11.6% YOY growth.
2025?
You will not find predictions for 2025 from me here. We know that 2025 will be a year of not only change, but of surprises. At best, we may benefit from this 2024 growth trend in the first few months of 2025. Beyond that, I am not wagering. But I will see you here in a year after the next Thomson Reuter’s annual report.
-Maureen
Register to download the Thomson Reuters 2025 Report on the State of the US Legal Market. This well-researched report is produced by Thomson Reuters in conjunction with the Center on Ethics and the Legal Profession at Georgetown Law.
