February 12, 2018
Law Firm Market Strengthens, Thomson Reuters Peer Monitor Index Jumps Sharply
Demand, rates and productivity all up for first time in four years
EAGAN, Minn., Feb. 12, 2018 — The large law firm market had one of its strongest quarters in recent years during the fourth quarter of 2017. Demand, rate growth and productivity all gained in the same quarter for the first time since Q3 2013.
The Thomson Reuters Peer Monitor Index (PMI), which measures the relative health of the U.S. large law firm market, rose a sharp 11 points to 60 — one of the largest quarterly gains in the index in several years.
Demand for law firm services rose 1.0 percent, the biggest quarterly gain since Q1 2016. For all of 2017, however, demand shrank slightly, declining 0.2 percent — marking the second consecutive yearly decline in demand.
Rate growth reached a nearly four-year high, up 3.4 percent — the strongest growth since Q1 2014. For all of 2017, rates rose 3.1 percent — the best annual performance since 2014.
Perhaps most encouraging was surprisingly strong productivity. While the gain was only 0.1 percent, it was the first positive quarter since 2013, reflecting both rising demand and restrained headcount growth.
For the first time in more than six years, all three of the largest practice areas — litigation, corporate and labor & employment — had a positive quarter for demand growth. Litigation saw its first quarterly demand growth since 2012, rising 0.3 percent and breaking a string of 22 consecutive quarterly declines.
Transactional practices were mixed, as corporate and tax work rose, but real estate declined. Patent litigation, patent prosecution and bankruptcy all fell slightly.
“The fourth quarter of 2017 was unquestionably positive for the law firm market,” said Mike Abbott, vice president, Client Relations and Global Thought Leadership, Thomson Reuters. “Firms are generally seeing improved pricing power and are achieving better balance between demand and supply. 2018 will be an interesting year as we closely watch whether these favorable trends continue or the market reverts to the more moderate trends that have predominated in recent years.”
A copy of the Q4 2017 PMI report can be downloaded here: http://legalsolutions.thomsonreuters.com/law-products/solutions/peer-monitor/index-report-access
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.
For more information on Peer Monitor, visit http://legalsolutions.thomsonreuters.com/law-products/solutions/peer-monitor.
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