Midsized Law Firm Market Update: Forecast Brightens, But No Blue Sky Yet

October 22, 2014

West Small Firm Resource CenterAfter years of economic turbulence, Midsized Law firms may be able to look forward to a period of relative calm and stability, according to the latest Midsized Law Firm Report.

This collaboration between Thomson Reuters Peer Monitor and the Georgetown University Law Center takes a detailed look at the health and vitality of these firms and the market in which they operate. The full report can be accessed on the Managing Partner Series site.

To briefly summarize the report, it cannot be said that everything is coming up roses, but the picture appears to be brightening in several key areas:

  • Year to date, demand for the services of Midsized firms has dipped .6 percent. Although that is a decline, it is still better than the 2.7 percent decrease measured at the end of last year.
  • Average fees worked, defined as the fees actually generated by a firm’s timekeepers over a specified period, increased 2.2 percent over the same time period in 2013. Between 2013 and 2012, average fees worked decreased .7 percent.
  • Worked rates, which are those actually billed to a firm’s clients, rose 2.2 percent. At the end of 2013, they had declined .7 percent year-over-year.

Now, one thing to note is that during the first half of 2013, Midsized law firm grew 1.7 percent in terms of lawyers. These law firms are adding to their headcounts even when work is not appreciably picking up, and that cuts into productivity and, further down the line, important measures like firm profitability. If Midsized firms could collectively figure out a smart approach for healthy growth, it might make them look healthier on paper.