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The U.S. legal industry climbed to 1,142,700 jobs last month, returning to last year’s highwater mark set in October, according to recent data released by The U.S. Department of Labor’s Bureau of Labor Statistics on Law360. Professional and business services, which includes the legal sector, showed stronger gains, adding 42,000 jobs last month, in line with the average monthly gains for those services over the past 12 months, the report said.

In addition, some other recent reports indicate that the legal industry as a whole is performing well financially. One report, released in late January by Wells Fargo Private Bank’s legal specialty group, in a check-in on 2018’s year-end results found the strongest annual performance among law firms in a decade, with firms reporting average revenue growth of 5.9 percent and average net income growth of 7.6 percent.

That was consistent with another report published in December by Citi Private Bank Law Firm Group and Hildebrandt Consulting, which found that last year was the U.S. legal industry’s best for financial growth in nearly 10 years, Law360 reports. According to the report, law firm revenues during the first nine months of 2018 grew by 6.3 percent on average, due to increases in billing rates and, to a lesser degree, demand growth.

The Citi report was generally optimistic about the industry’s outlook for 2019, predicting that law firms will become more adept at using technology, project management and alternative pricing to become more efficient. It also predicted an uptick in equity partner retirements, putting the onus on firms to invest more time and energy into client transitioning.

“We are optimistic about 2019 and do not anticipate a downturn in the industry. When the inevitable downturn does occur, the biggest expense management opportunity for firms will be to study whether the composition of their leverage models makes sense from a profitability standpoint,” Brad Hildebrandt, chairman of Hildebrandt Consulting, said in a statement at the time the report was released. “That said, experience tells us that law firms are typically quick to recover from economic downturns, so long as their internal fundamentals are sound,” (as quoted in Law360).

See highlights from the full article on Law360.

Contact Bill Sugarman for more information.

The American Lawyer reports that law firm demand in 2018 was the highest on record since 2011, according to a recent report by Thomson Reuters. Further amplifying evidence that law firms, especially the largest, reached new financials highs in 2018. Another report, conducted by Citi Private Bank’s Law Firm Group, found that revenue growth was up 6.4 percent at the 191 firms surveyed by the bank. And in the last two weeks, Wells Fargo reported average law firm revenue growth at 5.9 percent and average net income growth at 7.6 percent, the strongest numbers since before the Great Recession.

Thompson Reuters report specifically revealed that law firm demand, billing rates and lawyer productivity all rose during the year. According to the analysis, demand, measured as the number of hours billed, rose 1 percent for the year among all firms. Among the Am Law 100 firms, that number was 2.8 percent. Am Law Second Hundred firms and midsize firms saw demand growth in 2018 of 0.4 percent and 0.2 percent, respectively. The Am Law 100 was the only segment of firms that saw demand growth in all four quarters of the year, the report found, (as quoted in The American Lawyer).

Fortunately for smaller firms, rate growth was more evenly distributed, the report notes. The Am Law 100 saw rates grow 3.8 percent in 2018, compared to 2.9 percent for firms in the Second Hundred and midsize categories. The report also notes that Am Law 100 firms were the only segment of firms to show positive full-year growth in productivity, which measures hours worked per lawyer. The 100 largest firms by revenue grew productivity in 2018 by 0.8 percent, while that figure was flat at Second Hundred and midsize firms, (as quoted in The American Lawyer).

Mike Abbott, a Thomson Reuters vice president for enterprise thought leadership and content strategy, said that while 2018 was a banner year for law firms— especially the nation’s largest—there remains uncertainty around 2019, especially after the fourth quarter was somewhat softer than earlier quarters. “Whether the tailwinds will continue in 2019 remains to be seen, as client rate pressure and a shifting competitive landscape for legal services continue to pose challenges,” Abbott said in a statement. “And while the entire market was improved in 2018, we saw an increasingly segmented market where the very largest firms gathered the lion’s share of the gains last year.”

See highlights from the full article on The American Lawyer.

Contact Bill Sugarman for more information.

The American Lawyer reports the legal industry is poised to have its strongest annual performance in a decade, according to a recent report by Wells Fargo Private Bank’s legal specialty group. The report, drawn from a survey of 120 firms, found that revenue was up 7 percent industry-wide, buoyed by demand growth of 3.3 percent when compared to the same time period last year. The results, Wells Fargo said, “almost certainly assure that the industry will report its strongest annual performance in a decade.”

The report revealed revenue at the 50 largest firms grew by 8.2 percent, compared with 5.7 percent at firms ranked 51 to 100 and 2.3 percent for the Second Hundred firms. In addition to revenue growth, law firm demand increased 4.3 percent for Am Law 50 firms; rose 2.5 percent for Am Law 50-100 firms; and dipped 0.2 percent for the Second Hundred. Firms also reported strong increases in profitability, with income to equity partners up 7.7 percent from a year ago at the same time. That is partly driven by shrinking partner head count. The survey noted a 3.5 percent decline in equity partner full- time equivalents in 2018, with 75 percent of firms reporting a decline in partner head count, (as quoted in The American Lawyer).

See highlights from the full article on The American Lawyer.

Contact Bill Sugarman for more information.

Law firm financial performance finished 2017 on a positive note, with a larger segment of the legal market contributing to upward trends in revenue and profits than in recent years, according to a new report by Wells Fargo Private Bank’s Legal Specialty Group.

The report, drawn from a survey of 160 firms, reported that law firm revenue and profits were up between 3 percent and 4 percent for the legal market overall. Firms in the Am Law 50 reported revenue growth of 6.8 percent in 2017, while the Am Law 100 as a whole reported a 5.26 percent increase in revenue. Firms in the Am Law Second Hundred saw a smaller revenue uptick of 2.33 percent in 2017, the report revealed (as quoted in The American Lawyer).

“The enthusiasm is derived from a slight-to-moderate improvement in transactional activity,” the Wells Fargo report said. “Most believe the corporate tax changes and a general improvement in our economy will buoy corporate, M&A, capital markets, and other transactional work.”

See highlights from the full article on The American Lawyer.

Contact Bill Sugarman for more information.