The strong start for the legal industry we reported on three months ago continued in the second quarter of 2014. While demand growth slowed slightly, rates grew at modestly higher levels compared with the first three months of the year. And although expense growth picked up, revenue gains remained higher, suggesting full-year profit margin growth.
While the industry is well ahead of where it was this time last year, there are headwinds. Demand growth accelerated in the second half of 2013, so the year-over-year comparisons in the second half will be more challenging. That said, we still forecast 2014 to be a better year than 2013.
During the six-month period, performance varied widely across industry segments. Am Law 1-50 firms outperformed all other segments in revenue, demand and rate growth, just as they did in the first quarter, although their growth in these metrics slowed from the first quarter of 2014. Global and international firms continued to outperform U.S.-centric firms. Firms with strong transactional practices have fared very well, while litigation has lagged.
