Law Firm Market Continues to Recover: Q1 Peer Monitor Index
The law firm market continues to show encouraging signs as it recovers from the effects of the COVID-19 pandemic. The Thomson Reuters Peer Monitor Economic Index found that demand for legal services dipped slightly in Q1, falling 1.0%. However, that was in comparison against Q1 2020 which was a strong quarter prior to the economic impact of the pandemic fully taking hold. In Q1 2021, rate growth remained strong, although slightly lower than previous quarters, and productivity was nearly flat.
Corporate work was particularly strong, up 1.8%, driven by a surge of M&A activity. Litigation continues to lag, but could potentially rebound in coming months if courts are able to address their backlog of cases.
Overhead expenses were down a sharp 8.5% for a year earlier as expenses such as office expenses and recruiting continued to fall at double-digit rates. At the same time, expenses from employees returning to office are beginning to move higher again, an indicator the business environment may be returning closer to pre-pandemic levels.
“While some of the data remains mixed, most signs point to a large law market that is moving towards more normal levels of activity,” said Mike Abbott, vice president, Market Insights and Thought Leadership, Thomson Reuters. “Strategies employed over the last year − such as expanding flexible working arrangements, supporting higher rates and reducing costs − have generally put firms in a good position as the trends show a continued recovery through the first quarter.”