Law Firm Revenue Increase Driven By Billing, Not Demand

In the first half of this year law firm revenues increased by 4.1 percent, compared to the 3.3 percent growth for the first half of 2015. But the increase, which the New York Times calls “surprisingly strong,” appears to be driven primarily by an increase in billing rates, which were up 3.2 percent, according to Citi Private Bank’s quarterly report on the legal industry. Law firms kept expenses in line with last year, but the increases in junior lawyer’s salaries that swept the industry this summer may have an impact in the second half of the year. Static expenses and increased revenue mean higher net income and profit per equity partner than a year ago. However, Chairman of Citi’s legal group Dan DiPietro still predicts low single-digit profit growth for the year. The findings were based on answers from 180 law firms.