Law firms see 'sharp spike' in demand in third quarter, report says
Demand for legal services increased 3.9% in the third quarter of 2025, a “sharp spike” that made it the fourth-highest quarter for demand in two decades, according to a report based on data from major law firms in the United States and key international markets.
The previous top three quarters for demand were in 2021, when firms were rebounding from COVID-19 pandemic lows, according to the Law Firm Financial Index report by the Thomson Reuters Institute, available here.
The third quarter in 2025, by contrast, “reflected far more real growth that was driven by sustained client activity rather than a return to baseline,” the report said.
The surge in demand is largely attributable to transactional practices, particularly mergers and acquisitions, which is up 7.6% year over year. The report also found “robust activity” in general corporate, real estate and tax transactional work.
Midsize firms were “leading the way” in transactional demand growth, with a 6.1% increase in demand, the report said. Growth in countercyclical practices, such as litigation and employment, was most pronounced in the Am Law Second Hundred firms, which had a 6.3% growth in such work.
“The competitive landscape is being redrawn as clients reassess their legal partnerships,” Thomas Reuters said in an online report summary. “Many are prioritizing value and flexibility, shifting work to firms that offer more competitive pricing—a trend we’ve noticed for the past year or so. This is obviously working to the advantage of those firms seeing significant demand growth as a result, but the more expensive law firms are also seeing boosted performance, as the trend helps them secure higher rates on the work they do maintain.”
In response to the demand for legal services, firms are “investing heavily in talent and technology,” the summary said.
The report found third quarter year-over-year increases in:
• Revenue per lawyer, up 6.6%
• Worked rates, the price that clients pay after negotiations, up 7.4%
• Legal technology, up 11.2%
• Knowledge management, up 11.9%
Write a letter to the editor, share a story tip or update, or report an error.
