Thomson Reuters Peer Monitor Index Rises for Second Consecutive Quarter Reflecting Strength in Large Law Firm Market

MINNEAPOLIS-ST. PAUL, November 12, 2018 — The large law firm market scored a second consecutive quarter of positive performance, as stronger demand and productivity offset a slight easing in rate growth and a jump in direct expenses. The Thomson Reuters Peer Monitor Economic Index (PMI)[1] rose one point to 63.

Demand for large law firm services rose 1.9% – the best quarterly performance since 2011. Year-to-date, demand is now up 0.9%. By comparison, at this time one year ago, demand year-to-date was slightly negative.

In addition, demand growth is fairly broad-based, as the averages for demand growth were positive across Am Law 100, Am Law Second Hundred and Midsize firms in the third quarter.

Litigation continues to bounce back after several years of steady decline. Demand for litigation rose 2.5% on average in the third quarter.

Worked rates rose by an average of 3.1%.

Productivity continues to improve, reflecting demand growth and restrained headcount growth.

Direct expense growth rose to 3.4% while indirect expense growth declined slightly to 2.5%.

“We continue to see encouraging signs of strength in the large law firm market,” said Mike Abbott, vice president, Enterprise Thought Leadership and Content Strategy, Thomson Reuters. “Demand for legal services, rates and productivity are, on average, all improving this year. While some of the improvement is a result of clearing a lower bar set during a weaker 2017, the overall picture is markedly better so far this year. Despite uncertainties affecting the economy such as global trade wars, the law firm market is seeing better performance nearly across the board as we head towards the end of the year.”

A copy of the Q3 2018 PMI report can be downloaded here: http://www.legalexecutiveinstitute.com/pmi-q3-continuing-rise/.

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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[1]  The PMI is a composite index score, representing the quarter-over-quarter change in drivers of law firm profitability, including rates, demand, productivity and expenses. Positive factors driving firm profitability will produce a higher score. A score exceeding 65 generally indicates a healthy operating environment.

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