Yet another legal industry watcher closed the books on 2023 and found the overall financial prospects for large law firms on the upswing. The Thomson Reuters Institute’s Law Firm Financial Index tracked positive movement in the fourth quarter of 2023 in terms of demand, rates, productivity and expenses—all the composite elements of its index measuring the drivers of law firm profitability. Here’s how my colleague Dan Roe summed up the findings:

Financial discipline helped the Am Law 50 close out 2023 strong as transactional demand remained slow, according to a new report from Thomson Reuters.

Compared to Q4 2022, demand in the Am Law 50 fell nearly 2% last quarter, while demand rose by more than 2% for the Am Law 51-100 and the Second Hundred. Still, the Am Law 50 saw nearly as much of an increase in overall fees worked—nearly 8%—compared to respective increases of roughly 11% and 9% for the Am Law 51-100 and Second Hundred.

Dan pointed out that the rosy-ish picture for revenues came despite an overall drop in corporate demand, which remained down 0.5% from Q4 2022 across firms of all sizes. Thomson Reuters’ Bill Josten told Dan that growth in the industry came on the back of moves to maintain financial discipline and manage headcount while moving forward with aggressive rate hikes.