September 22, 2022
2022 Report on the State of the Midsize Legal Market Paints Bullish Outlook
Competitive rates and cost structure are helping midsize firms win more business
MINNEAPOLIS-ST. PAUL, September 22, 2022 – Midsize law firms are seeing a resurgence in demand growth by positioning themselves as strategic alternatives to larger firms. That’s among the findings of the 2022 Report on the State of the Midsize Legal Market from the Thomson Reuters Institute.
Midsize firms saw demand grow 1.7% on average through the first six months of 2022, nearly matching Am Law Second Hundred firms, which grew 1.8%, and ahead of Am Law 100 firms, which saw growth of 1.1%. Midsize firms grew their litigation practices 1.2%. Labor & employment and real estate were even stronger, up 2.5% and 6.5%, respectively – all of those figures were above the averages for all law firms tracked by the Thomson Reuters Law Firm Financial Index.
While midsize firms had lower worked rate growth than their larger competitors, this may have contributed to the strong demand growth, as the lower rate growth may have heightened the appeal of midsize firms to increasingly cost-conscious clients. In addition, midsize firms had better productivity figures than larger firms, as restrained lawyer headcount growth helped them better manage capacity against available work.
Notably, technology spending grew a robust 9.1% in the second quarter of 2022, as calculated on a rolling 12-month basis – a sizeable jump from the 4.6% growth seen a year earlier.
“Midsize firms are playing to their strengths,” said Barb McGivern, general manager, Midsize Law Firm business, Thomson Reuters. “By exercising restraint in rates and keeping their costs in check, clients are increasingly recognizing midsize law firms’ ability to provide quality legal services at highly competitive rates, particularly for less high stakes but higher volume work.
“Many midsize firms may be looking to extend what they see as their competitive advantages,” continued McGivern. “The acceleration we’re noting in technology spend suggests that midsize firms are continuing to invest in their tech stacks to build new capabilities and competencies.”
Competition for talent continues to be a challenge for firms of all sizes. But by focusing on retention factors besides compensation, such as creating firm cultures that promote work satisfaction, midsize firms can compete for talent without necessarily having to match the salaries offered by larger firms.
The 2022 Report on the State of the Midsize Legal Market can be downloaded here.
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.