Legal industry results halfway through 2017 reinforce our belief that full-year results will feature margin compression, low-single-digit growth in revenue and profits and continued dispersion and volatility in performance. While revenue growth was higher than in any first half of the last three years, the expense increase, due in large part to the rise in associate salaries implemented in mid to late 2016, was slightly higher than revenue growth, a reversal of the trend in the prior three comparable periods. On a positive note, lawyer demand growth and rate increases were each somewhat stronger than in any of the last three years at the halfway mark. Demand dispersion (the range of increases to declines in a given period) and volatility (an up period followed by a down period or vice versa) continue to plague the industry at levels similar to what we’ve seen in the post-2010 years.
These results are based on a sample of 186 firms (83 Am Law 100 firms, 51 Second Hundred firms and 52 niche/boutique firms). Thirty-three of these firms fit our definition of either “international” (less than 25 percent but more than 10 percent of lawyers based outside the United States) or “global” (at least 25 percent of lawyers based outside the United States). Citi Private Bank provides financial services to more than 600 U.S. and U.K. law firms and more than 35,000 individual lawyers. Each quarter, the Law Firm Group confidentially surveys firms in The Am Law 100 and the Second Hundred, along with smaller firms. In addition, we conduct a more detailed annual survey and produce the Law Firm Leaders Confidence Index semiannually. These reports, together with extensive discussions with law firm leaders, provide a comprehensive overview of current financial trends in the industry as well as forward-looking insight.
