“The law firm market has largely recovered after persevering through unprecedented challenges,” said Paul Fischer, President, Legal Professionals, Thomson Reuters. “Demand, measured in billable hours, increased a remarkable 7.3% in the second quarter, which more than offset the sharp decline seen in the same period a year ago. The demand for legal services is now higher than it was two years ago. , before the pandemic. And measures of corporate profitability are significantly higher. There are still uncertainties, but companies are generally performing well under the current conditions and appear well placed to withstand whatever lies ahead. ”
The dramatic increase in demand in the second quarter was mainly due to strength in mergers and acquisitions and other corporate activity. Several other practice areas, including real estate and employment, have also seen demand surpass pre-pandemic levels. Partial recovery in the context of litigation also contributed. Although rate growth slowed slightly from previous quarters, it was still strong at 3.4% this quarter.
Meanwhile, overheads such as office expenses have continued to decline, even as many businesses prepare to return to the office. Spending on technology and knowledge management, including library services, were notable exceptions, increasing in the second quarter as firms continued to invest in resources to support attorneys’ workflow – to both remotely and in the office.
“The legal market has shown tremendous resilience not only to resist, but also to find ways to grow amid the enormous disruptions of the past year,” said Mike Abbott, vice president, Market Insights and Thought Leadership, Thomson Reuters. “Firms and lawyers are leveraging strategic and operational flexibility, as well as innovative technologies, to meet the rapidly changing needs of their clients and position their firms for continued success in conditions that remain both fluid and challenging.” . “
The report notes that many of the current drivers of law firm profitability will continue to change over the coming months as demand and pricing adjust to ever-changing pathways of economic recovery and the pandemic.
A copy of the Q2 2021 PMI Report can be downloaded at: https://www.thomsonreuters.com/en-us/posts/legal/pmi-q2-2021-market-rebounds/.
The PMI, produced by Thomson Reuters, is a composite index of law firm market performance using real-time data drawn from leading law firms in United States and the main international markets.
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1 The PMI is a composite index score, representing the quarter-over-quarter change in law firm profitability factors, including rates, demand, productivity, and expenses. The positive factors that boost the profitability of the business will produce a higher score.
SOURCE Thomson Reuters