Law firms achieved elevated revenue growth in the first quarter of 2024 and continued to heavily invest in technology. These are among the findings of the Q1 2024 Thomson Reuters Law Firm Financial Index (LFFI), powered by Financial Insights.

Legal Current shares key takeaways from the report, which found that law firms returned to a healthy financial state as demand was up 1.9% over the previous quarter. 

  1. Firms’ technology investment grew at the most rapid pace since 2014. In terms of real technology investment, or the growth in spending on technology minus inflation, law firms invested at their most rapid pace in 10 years. The generative artificial intelligence (AI) evolution in the legal industry seems to be making an impact at least on firms’ Of note, firms are effectively controlling costs in other areas to keep focusing on their technology investment.
  2. Litigation growth drove the uptick in demand. Litigation practices saw 3.8% growth – one of the strongest increases outside of the post-pandemic upsurge – even as other counter-cyclical practices faded slightly. Law firms still saw solid growth in bankruptcy, at 3.0%, and steady performance in labor & employment of 1.0%. In addition, transactional practices appear to have stopped contracting, with corporate (all) growing 0.6%. 
  1. Worked rates are growing at the fastest pace since the Great Financial Crisis. Worked rate growth was at 6.4% in Q1. A notable development involves midsize law firms, which raised their rates faster than the Am Law 200 – a Q1 rarity that has happened only three other times since 2011. The new set of rates, in conjunction with demand growth, contributed to firms’ strong revenue growth. 

The LFFI is a composite index of law firm market performance using real-time Financial Insights data drawn from major law firms in the United States and key international markets.  

For more insights on Q1 law firm performance, download the Q1 2024 LFFI report.  

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