Cost Cuts, Higher Rates Drive Peer Monitor Index Higher
Law firms finished 2020 on an optimistic note. Weakness in demand moderated, rates remained high, and firms were able to reduce several key costs. As a result, the Thomson Reuters Peer Monitor Index (PMI), which measures key law firm performance indicators hit a near-record high in the fourth quarter of 2020.
Demand for law firm services was only 0.3% lower than the fourth quarter a year earlier. Demand fell sharply in the second quarter of 2020 as the COVID-19 pandemic took hold but has since gradually recovered. The weakness in demand was more than offset by rates that were at some of the highest levels seen in recent years. At the same time, firms responded to the disruptions caused by the pandemic by slashing costs such as office expenses and business development.
“Law firms demonstrated their resilience in 2020, taking swift, decisive measures to adjust to the many difficulties brought on by the COVID-19 pandemic,” said Mike Abbott, vice president, Market Insights and Thought Leadership, Thomson Reuters. “Proactive rate strategies, aggressive cost cutting, successful remote-working models and increased investment in productivity-enhancing technologies all helped produce positive results in the face of unprecedented challenges.”