Challenging market conditions belied the strong results, on average, that the legal industry reported in the first quarter of 2016. In the first quarter, revenue grew 5.8 percent, driven by increases in demand and billing rates, as well as a strong collections effort. Further, the industry saw revenue growth outpace expense growth, while inventory growth was solid. Both are positive signs heading into the second quarter. Has the legal industry broken from the pattern of modest growth that defined the post-recession years of 2009-13? Or were the results from the first quarter of 2016 simply fueled by fourth-quarter activity and buoyed by a comparison to the slow start of 2015?
These results are based on a sample of 176 firms (79 Am Law 100 firms, 45 Second Hundred firms and 52 niche/boutique firms). Thirty-four 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 (LFLCI). 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.
