Peer Monitor Index Holds Steady in Q3
Cross-currents buffeted the large law firm market in the third quarter. Firms saw the highest rate growth in two years, but also suffered the second consecutive quarterly decline in demand.
The result was that the Peer Monitor Index held steady at 48 for the quarter.
Rates have been rising steadily all year. In the third quarter, worked rates jumped 3.1%, the highest rate growth since Q3 2014.
But offsetting that was a drop in demand for large law firm services, which fell 1.1%. This was a steeper drop than the second quarter, when demand fell 0.9% and broke a string of nine consecutive quarters of growth.
Meanwhile, expenses have been growing every quarter this year. Direct expenses rose 4.3% in Q3 – the highest rate in more than four years. Indirect expenses were up 4.1% – rising faster than any time since Q4 2008.
Productivity was down sharply, falling 2.5%. While lawyer headcount growth pulled back slightly, new lawyer hiring is still running ahead of last year’s levels.
