Two steps forward, one step back for large law firms in the first quarter. Demand for legal services rose, as did rates, helping boost the Thomson Reuters Peer Monitor Index to its highest mark in almost two years.

Demand rose 0.3%, and worked rates were up 3.0%, one of the strongest quarterly rate growth figures in more than two years. Firms had been struggling with rate growth for several years. But rate growth has improved in four of the past five quarters, reaching 3.0% in the first quarter, the second-highest mark since Q3 2014.

However, much of that improvement is being masked by weak collected realization, and overall pricing power remains weak. While rate growth has been accelerating, collected realization on worked rates had its biggest six-month slide in four years. Collected realization has dropped 1.2 percentage points over the last two years to 88.6 percent. So firms, on average, are collecting less than 89 cents on every dollar of work at the negotiated or agreed-upon rates. While firms have been able to push through higher rates, at the same time, they are collecting less when the client invoices come due.

Among practice areas, corporate work was up in the first quarter, boosted by strength in M&A work. IP practices were also stronger. Litigation work, meanwhile, was down in the first quarter, as were labor and employment, and bankruptcy.

A copy of the Q1 2017 PMI report can be downloaded at: http://static.legalsolutions.thomsonreuters.com/static/pdf/PMI_Q1_2017.pdf