Law firm revenue climbed 5.6 percent in year's first half, survey finds
Law firm revenue jumped 5.6 percent in the first half of the year, compared to the same period last year, according to a survey of about 135 law firms by Wells Fargo Private Bank’s Legal Specialty Group.
Driving the gains were law firms in the top tier—the Am Law 50, report Law.com and Bloomberg Big Law Business. Revenue grew 7 percent for law firms in the Am Law 50; 6.6 percent for firms in the Am Law 100–which includes the Am Law 50; and just under 3 percent for Second Hundred firms.
The survey also found that revenue per lawyer was up 3.8 percent and demand, measured by hours billed, was up 1.4 percent. Lawyer headcount rose 1.7 percent and expenses were up 5.5 percent, driven largely by associate salary hikes and headcount increases.
Demand differed among law firms in different tiers, however. Demand increased 3.2 percent for law firms in the Am Law 50 and rose 2.2 percent for Am Law 100 firms, but decreased 1.3 percent for those in the Second Hundred.
Demand in firms ranked between 101 and 200 could be down because more firms in that tier are using alternative fee models, or because the firms have a greater focus on litigation, which has been soft, according to Law.com.
The positive findings followed similar results released by Citi Private Bank Group and Thomson Reuters, which also found that larger, more profitable firms had better results.
Joe Mendola, a senior director at Wells Fargo, told Law.com and Bloomberg he was surprised by the findings.
“I thought that the mid-year report would have been a little softer than what the numbers support,” he told Bloomberg.
Mendola said the revenue hikes were due to increases in billing rates and demand. Typically, when billing rates rise, “there’s some push back on realization,” he told Bloomberg “But the realization rates held firm, so that’s a very positive sign for the industry.”
The survey included about 60 Am Law 100 firms; the others were in the Am Law 200 or were regional firms.