The latest report on the state of the legal market from Thomson Reuters and Georgetown Law suggests that certain large firms might have a “false sense of security” in light of the migration of certain kinds of work—including litigation—to less expensive alternatives. Here’s how my Law.com colleague Hugo Guzman summed up the findings of the “2024 Report on the State of the US Legal Market”:
Legal departments are aggressively shifting work from the Am Law 100 and Am Law Second Hundred to less expensive law firms, a new study found, a trend that began to take root during the 2007-2008 financial crisis but was partly masked by a decadelong boom in transactional work.
With M&A activity down sharply the past two years, the extent of the shift is only now coming into full focus, according to a new legal market report by Thomson Reuters and the Center on Ethics and the Legal Profession at Georgetown Law.
The overall good news from the report drawing on data pulled from 179 law firms, including 48 Am Law 100 firms, 49 Second Hundred firms and 82 midsize firms: Demand for legal services was up by an average of 1.1% across all firms in 2023 after a .6% dip in demand in 2022. Litigation, which accounts for a little less than a quarter of all demand, was the biggest driver in overall growth last year. Demand was up 3.2% in the litigation practice last year—a 15-year high. But that uptick in demand for litigation hours wasn’t felt equally among all segments of the industry. According to the report, litigation demand rose 4.4% among midsize firms, compared to just 2.4% for Am Law 100 firms and 2.5% for the Second Hundred firms in the Am Law 200.