Law firm profits might start to drop this year, new report says
Law firm profits could decrease in 2026, industry analysts warn in a new report. (Image from Shutterstock)
Law firm profits could decrease in 2026, industry analysts warn in a new report, according to Law.com.
The 2026 Report on the State of the US Legal Market from Thomson Reuters, published Wednesday, found warning lights in the form of monumental expense growth, unsteady realization and poor economic fundamentals, according to Law.com.
The report authors found that the average firm delivered a “profit bonanza” through most of 2025 but also that net spend anticipation—a measure of the percentage of corporate general counsels who say they plan to spend more on outside legal services—slid throughout 2025, Law.com reports.
The report authors noted that demand growth increased substantially just before the 2008 financial crisis and also when the post-COVID-19 pandemic transactional boom crashed because of soaring inflation and interest rates, according to Law.com.
“The legal industry has a peculiar historical habit of surging just before it stumbles,” according to the report. “Today’s demand explosion bears uncomfortable similarities to those previous peaks. We’re seeing the same breathless deal-making, the same confidence that this time is different, the same assumption that current conditions represent a new normal rather than an aberration.”
See also:
Law firms saw surge in demand and profits in 2025, new report says
Write a letter to the editor, share a story tip or update, or report an error.
