As COVID-19 Outbreak Looms, Large Law Firm Market Has Strong First Quarter Says Peer Monitor Index
The Q1 2020 Thomson Reuters Peer Monitor Economic Index (PMI) report, found the large law firm market saw strong growth in demand and rates in the first quarter, setting a robust foundation at the onset of the COVID-19 outbreak. It’s important to note that the bulk of the social and economic impact of the outbreak in the U.S. only began in the last few weeks of the quarter.
The PMI rose by four points to 57. Demand was up a strong 2.0%, outpacing last year’s mark of 1.0%.
It capped a string of eight consecutive quarters of either positive or flat demand growth – the first extended period of such performance since the end of the Great Recession. Rate growth was also strong – up 4.1% – but was concentrated primarily among the largest firms.
“While law firms are currently trying to come to grips with the COVID-19 situation, the market is coming off of a strong base,” Mike Abbott, vice president, Market Insights and Thought Leadership, Thomson Reuters. “Significant changes are taking place at many firms. Law firm operations are being adjusted to accommodate work-from-home and office closures. Many clients are dealing with disruptions in their business. Court closures are causing delays in hearings. Most of these changes did not start coming into effect until mid-March. The full impact will become more apparent in subsequent quarters.”
In the first quarter, corporate work and real estate were among the strongest practices, while litigation was slightly positive. IP practices and tax work were generally lower.
Productivity fell, as the robust demand was not enough to overcome continued growth in headcount. The outlook for lawyer growth is unclear in the near term as many firms are adjusting hiring plans and summer associate programs. Direct expenses rose in the first quarter, due to the growth in headcount, while overhead expenses fell.
For more insights, download a copy of the Q1 2020 PMI report. For more information on Peer Monitor, visit http://legalsolutions.thomsonreuters.com/law-products/solutions/peer-monitor.
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.
