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Law firms see revenue increase by 5.5% in 2018

This year looks to be a very positive year for law firms, according to Gretta Rusanow, Head of Advisory Services at Citi Private Bank’s law firm group.

In fact, a report from Citi Private Bank revealed that firms have already seen revenue increasing by 5.5% over the past six months, and this success is set to continue for the remainder of the year.

This performance is the strongest the sector has seen since the recession, and it’s suggested that this impressive rise in revenue is a direct result of rising demand and higher rates.

Revenue increase by size

The report, which compared data from 186 firms, found that 80% of those in the top 50 largest firms reported witnessing an impressive increase in revenue during this period (January to June 2018). The largest reported increase from these organisations was actually 6.8%, outpacing the average.

Interestingly, the data found that a 3.2% increase in revenue came from increasing demand for law firms, and a further 4.8% came from rising rates.

Those that fell in the second category (the 51-100 largest firms) did not see as much success, with revenue increasing by a smaller 3.7% in those six months. That said, they still saw a rise which is important to note.

 

It is likely that those in the top 50 largest firms saw more impressive rates as they added more headcount than the other firms and saw the biggest rise in productivity.

Smaller firms in the second 100 performed weakest of all, with their revenue only increasing by 1.3%. Interestingly, the smallest niche firms saw the best results overall, with above average hikes in revenue of 6.9%.

Performance by location

The data also revealed another interesting trend. Firms that covered several locations, one in four of which have lawyers that are based outside the US, saw even stronger growth, as revenue increased by a staggering 8.1%. Unfortunately, those with less lawyers outside of the nation didn’t perform as well.

While things are looking positive for the remainder of the year, Rusanow does add that firms must take into consideration the upward pressure on expenses that’s still to come in the following six months.

Final thoughts

Whilst it is positive to see revenue on the rise, headcount only grew by 1.8% when compared with data from the same period in 2017. But it’s not all bad news, with equity partners seeing a decline of 0.5%, lawyers have access to a bigger percentage of the profits.

Though there are several factors to consider, the rest of the year looks set to be positive for law firms.

 

Therefore, if you are looking to take advantage of this growing market, and want to discuss career options, or you are considering adding people to your team, contact Law Consultants today.

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