Strong inventory levels at the end of 2022 helped the law firm industry post moderate average revenue growth during the first quarter of 2023, though the demand environment remains challenging for law firms. Continued inflationary pressures, fears of a looming recession, ongoing international conflicts and disruptions to the banking system in the U.S. and Europe all contributed to downward pressure on demand. Meanwhile, revenue growth wasn’t strong enough to absorb the expense pressure firms experienced in the first quarter. And while the collection cycle slowed, strong growth in inventory is a potential positive sign for first half revenue growth if firms can collect it.
These results are based on a sample of 193 firms (81 Am Law 100 firms, 53 Second Hundred firms and 59 niche/boutique firms). Forty-three of these firms fit our definition of either international (less than 25% but more than 10% of lawyers based outside the United States) or global (at least 25% of lawyers based outside the United States). Citi’s Global Wealth at Work Law Firm Group provides financial services to more than 900 law firms around the world and approximately 50,000 lawyers. Each quarter, the group confidentially surveys firms in the Am Law 100 and the Second Hundred, along with smaller firms. In addition, we conduct a more detailed annual survey and produce the Law Firm Leaders Confidence Index semiannually.
