BigLaw firms are taking 'two steps forward, one step back,' new Thomson Reuters report says
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Law firm productivity is dropping, driven by accelerated hiring that is driving the supply of lawyers higher than demand for their services, according to a report released this week.
Productivity decreased 1.2% during the second quarter of 2019 and is down 1.5% from the beginning of the year, according to the Thomson Reuters Peer Monitor Economic Index, which was issued Monday. The index report, available here, measures the health of major law firms in the United States and key international markets.
Lawyer head count increased 1.7% in the second quarter of 2019, about the same as the first quarter.
The report cited other financial negatives. Direct expenses were up 4.8% in the second quarter, while overhead expenses rose 3.4%.
But the financial news isn’t all bad, according to the Thomson Reuters Peer Monitor Economic Index. The report characterizes the situation as “two steps forward, one step back.”
The decrease in productivity is the one step back. The two steps forward are an increased demand for legal services, up 0.7% for the second quarter, and significantly higher billing rates, up 3.8% for the second quarter.
The mixed results show that law firms “need to keep a watchful eye on managing head count and other costs,” according to a statement in an Aug. 5 press release by Mike Abbott, vice president of enterprise thought leadership and content strategy at Thomson Reuters.