Average revenue at Florida law firms grew less than the national average in the first nine months of 2017, according to third-quarter reports from Wells Fargo.

The Wells Fargo report included data from 135 firms across the country and found that revenue at Florida firms grew 2.8 percent in the first three quarters of the year, lagging behind the national average of 3.7 percent. Twelve Florida firms were included in the survey.

Meanwhile, revenue at Am Law 100 firms were up 4 percent, and Am Law 50 firms were up 4.2 percent, said Jeff Grossman, managing director of Wells Fargo Legal Specialty Group in Charlotte, North Carolina. Am Law 200 firms averaged 1 percent growth at the same nine-month mark.

While results for Florida were weak, a survey of 180 firms by Citi Private Bank’s Law Firm Group found different results at the regional level. The Citi survey reported revenue up 4.4 percent overall in the Southeast, which was a stronger performance than the broader industry average that survey found—an increase of 3.6 percent.

The Florida region underperformed in part because the state is home to more Am Law 200 firms than other regions and the Am Law 200 has generally underperformed this year in gross revenue, demand, revenue per lawyer and attorney head count, Grossman said.

A midyear survey showed a short-term uptick in demand and gross revenue nationwide, Grossman said, but over the summer some of the gains from the first six months were lost.

The 12 Florida firms included in the Wells Fargo survey are nearly all of the Am Law 100 and 200 firms headquartered in Florida, as well as some regional firms. The median rate of growth was down in the third quarter by about 0.7 percent, meaning more firms grew less than they did last year. Am Law 200 and midsize firms have been losing market share to larger firms, Grossman said.

“The demand for lawyer work in the Florida region, that was up 1.5 percent,” he said. “But utilization—hours worked per lawyer—that was down 1.5 percent.“

The Citi survey found that among 20 firms headquartered in the Southeastern U.S., demand was down 1.7 percent at the nine-month mark, as compared with the same period in 2016. That drop was lower than the broader industry drop of 0.2 percent. The performance of the Southeast region ranked ninth out of 11 regions in the country.

Even so, total lawyer head count in the Southeast is outpacing head count growth industrywide, despite softer demand resulting in a 0.9 percent drop in productivity in the region, the Citi survey found. Total head count in the Southeast rose by 2.4 percent compared with only 1.7 percent industrywide. Head count expansion is also occurring in the equity partnership ranks in the Southeast, the report said, while the broader industry is holding or even slightly contracting the equity partner ranks.

“They’ve got themselves positioned the way you would position your firm if you were expecting an increase in demand,” said Michael McKenney, head of credit origination for the Citi Law Firm Group.

The Wells Fargo survey found that the average number of hours worked per lawyer in Florida was 1,535, about 80 hours less than a typical Am Law 100 firm in the same period, Grossman said. In 2017, the Am Law 100 attorney utilization was flat, while the Am Law 200 was down 1.7 percent.

Meanwhile, both the Am Law 50 and Am Law 100 saw demand increase in the first nine months of the year, although the third quarter was down as compared with the first six months of 2017, Grossman said.

Because lawyers are working fewer hours, some firms have been reluctant to raise rates, Grossman said. As this trend continues, the already substantial rate gap between firms is growing.

“We are generally seeing lower than average rate increases for the Florida region,” Grossman said. “One of the reasons that you are seeing lower revenue growth on average is that the rates aren’t growing as fast. Part of the reason we are seeing the larger rate gap is because the lawyers are underutilized.”

In the Southeast, lawyer rates are increasing by about 3.1 percent, according to the Citi survey. This is below the industry average of about 4 percent.

The Wells Fargo report said revenue growth drivers for law firms continue to be the billing rate, then lawyer utilization, and then expense management. The most successful firms, regardless of sector, are busy first, thereby improving confidence in their rates. The busiest firms do not have significant excess capacity, especially at the most senior levels.

McKenney said final 2017 results will heavily depend on collections in the fourth quarter. Firms are generally in a strong inventory position, and particularly so in the Southeast, where accounts receivable were 8.3 percent above the same period last year, according to the Citi data. Expenses are up, he said, particularly because of past increases in first-year associate salaries that put upward pressure on salaries of more experienced attorneys. Compensation expenses were up 8 percent in the southeast region.

“A number of firms have observed that some of their clients are slow in paying and they are trying to get their arms around why,” McKenney said.