Law Firms
Second quarter was ‘unnaturally calm’ for law firms amid ‘tumultuous’ backdrop, new report says
Client preferences may be shifting to more specialized or cost-effective legal solutions, according to Thomson Reuters’ Law Firm Financial Index. (Image from Shutterstock)
Client preferences may be shifting to more specialized or cost-effective legal solutions, according to Thomson Reuters’ Law Firm Financial Index.
The report released Monday found that the nation’s 100 top-grossing law firms, the Am Law 100, experienced a 0.6% decrease in demand for legal services. The numbers were better for lesser-grossing firms.
Demand for services increased 2.6% for Second Hundred firms and 3.5% for midsize firms, report Law.com and Reuters.
Overall, firms had a good second quarter, boosting the Law Firm Financial Index score to 55, an increase of four points from the first quarter. Demand increased 1.6%, and worked rates—the price paid for legal services after negotiations—were up 7.4%.
The index is a composite score based on factors such as firm rates, demand, productivity and expenses among 195 large and midsize firms. The report is available with this summary, according to a Aug. 11 press release.
Strong demand is spurring growth in head count, but that could translate to overcapacity if the financial numbers slip, the report warns. Firms are also investing in technology, a necessary expense to stay competitive, the report said.
Technology spending increased by 8.6% on a rolling 12-month average, while spending on knowledge management was up 11.2%.
“Despite a tumultuous geopolitical and economic backdrop, law firms found the second quarter of 2025 to be unnaturally calm—and unexpectedly prosperous,” the report said. “Whether this moment represents the start of a more stable era or merely reflects the eye of the hurricane with harsher winds to come, remains to be seen.”
The report said beneath the smooth surface, differences emerged in practice area performance. Mergers and acquisitions increased by only 0.3%, bested by litigation (up 2%), real estate (up 1.7%), tax (up 1.5%), corporate (up 1.3%) and labor and employment (up 1.3%).
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