The U.S. large law firm market scored a rare triple win in the second quarter, with strong gains in demand, rate growth and productivity. The Thomson Reuters Peer Monitor Index (PMI), which measures the relative health of the U.S. large law firm market, surged ten points to 62, its highest reading since 2011.
Demand for law firm services rose 1.4 percent in the second quarter – the strongest quarter for large firms in six years.
The segment of the market made up of the largest firms – the Am Law 100 – had an especially good quarter, with demand growing by an average of 3.2 percent. Am Law Second Hundred firms, however, saw average demand decline slightly, falling 0.2 percent. Midsize firms grew demand by an average of 1.8 percent.
Particularly noteworthy is that litigation practice groups were strong, with demand up 2.2 percent. This follows several years of steady decline in litigation demand. Demand for litigation services grew, on average, across all segments of law firm size. So far, this year, litigation demand is up 0.6 percent.
Worked rates grew by an average of 3.4 percent. Among Am Law 100 firms, average rates rose a robust 4.2 percent. Rates for Am Law Second Hundred firms were up 2.9 percent, while Midsize rates rose 3.0 percent.
Productivity rose, helping to partially offset years of decline. Productivity climbed for the second time in the last three quarters, gaining 0.9 percent. Firms have managed to bolster productivity recently through a combination of strong demand and slowing lawyer headcount growth. In the second quarter, headcount grew by an average of only 0.6 percent.
“The large law firm market had a robust second quarter, with averages for demand, rates and productivity rising,” said Mike Abbott, vice president, Client Relations and Global Thought Leadership, Thomson Reuters. “The market remains somewhat volatile, as this follows a surprisingly soft first quarter. But at the midpoint mark for the year, overall results so far have been encouraging. If favourable trends such as improved pricing power and restraint in headcount and expenses continue, the market could be poised for a strongly profitable 2018.”
A copy of the Q2 2018 PMI report can be downloaded HERE>>
The PMI, produced by Thomson Reuters, is a composite index of law firm market performance using real-time data drawn from major law firms in the United States and key international markets. A PMI of 65 or greater indicates strong law firm market performance.
