Peer Monitor Index: Legal Industry Reaction to Record-High Rating
Last week Thomson Reuters released the Q2 2021 Peer Monitor Economic Index (PMI), a composite index of law firm market performance, with a record high of 84 points – a 22-point jump and the biggest quarterly increase in the history of Peer Monitor.
The report explored the factors and trends contributing to the rating, including dramatic increases in both legal demand and productivity, upticks in spend on technology and knowledge management including library services, but declines in other overhead expenses. Legal industry journalists and influencers shared their perspectives on what these factors mean for the recovery of the law firm market.
Among the report’s notable figures was 7.3% – growth in demand for legal services in the second quarter of 2021, compared to the same period in 2020. Business Insider reporter Jack Newsham emphasized the impact of this increase in demand on hiring: “Rising demand has prompted law firms to compete fiercely for talent. Dozens of firms have raised first-year lawyer salaries to $200,000 or more, and many said they’d pay bonuses — widely seen as retention payments — in the spring, summer, and fall. Meanwhile, young lawyers say they’re so burned out they’re reaching a breaking point.”
Artificial Lawyer’s Richard Tromans considered the uptick in spend on legal tech – 3.3% compared to 2020 – and knowledge management, up by 5.1%: “Better KM systems will have supported firms in deal work and litigation matters. And a variety of legal tech tools will have allowed associates in particular to be more efficient and put more of their billable time into higher value matters for clients. Tech will also have enabled firms to take on more matters in total and allowed those deals to be managed more easily. In short, the ‘engine’ of the law firm is operating better, allowing more to happen and to generate more value.”
Journalists’ takes were upbeat, including reporter Roy Strom at Bloomberg Law, who noted: “Law firms have two basic ways to grow their business. Work more hours, or charge more per hour. … The encouraging part of the pandemic recovery has been that it was driven by a surge in demand.”
Law.com reporter Andrew Maloney also struck a positive tone: “Law firms are still grappling with how to return to normal. But a new analysis of their financial performance so far this year suggests they’ve come a long way since COVID-19 brought business to a halt last spring.” Reuters reporter Dave Thomas shared the positive perspective: “Law firms that weathered the pandemic are seeing average demand and productivity levels return to their pre-pandemic normal, according to a Monday report from Thomson Reuters Peer Monitor Index, while some practices are outpacing even the heady days of 2019.”