August 10, 2020
Thomson Reuters Peer Monitor Index Falls in Second Quarter
Demand drops, but rates rise and expense growth slows
MINNEAPOLIS-ST. PAUL, Aug. 10, 2020 — The large law firm market struggled in the second quarter as a result of stay-at-home orders, court closures and broader economic slowdowns, dropping the Thomson Reuters Peer Monitor Economic Index (PMI) by six points to 51.
Demand for law firm services saw its biggest quarterly drop since 2009, down 5.9%. Most major practices saw sizeable declines. Litigation dropped 7.5%, impacted by court closures and case postponements. Transactional practices were down across the board, with corporate work slipping 5.5%, tax work down 9.1% and real estate falling 12.2%. Other practices saw more modest declines, such as labor and employment, which fell 4.4%, and patent prosecution, which was down 2.5%. Meanwhile, bankruptcy was one of the few practices that saw increases in demand, surging 6.2% in the quarter.
Rate growth hit record highs, as worked rates rose 5.2%. However, Peer Monitor analysis found that much of the increase was attributable to some of the reduced workload shifting from associates to partners, raising average hourly billings.
“These are unprecedented times for the legal industry,” said Mike Abbott, vice president, Market Insights and Thought Leadership, Thomson Reuters. “While many firms are successfully adjusting their business models to work-from-home, they are still subject to the volatility and uncertainty surrounding their clients as well as the overall economy. We see law firms making rapid adjustments to better suit the current conditions – investing in productivity-enhancing technologies such as collaborative and remote work solutions, while reducing expenses in other areas such as overhead. More uncertainty lies ahead in coming months, but firms are clearly making efforts to improve efficiency and flexibility to deal with what’s to come.”
A copy of the Q2 2020 PMI report can be downloaded at https://legal.thomsonreuters.com/en/insights/reports/2020-q2-peer-monitor-index-pmi
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.
For more information on Peer Monitor, visit http://legalsolutions.thomsonreuters.com/law-products/solutions/peer-monitor.
Thomson Reuters is a leading provider of business information services. Our products include highly specialized information-enabled software and tools for legal, tax, accounting and compliance professionals combined with the world’s most global news service – Reuters. For more information on Thomson Reuters, visit tr.com and for the latest world news, reuters.com.
 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.