Last year finished out strong for the law firm industry, outpacing 2016 on revenue and profit growth. Stronger revenue growth came from comparatively higher billing rate increases and improved demand, especially during the fourth quarter. And while expense growth matched revenue growth, keeping margins steady, net income growth was a solid 4.5 percent. With a slight drop in equity partner headcount, that translated into growth of profits per equity partner of 4.8 percent. More good news could be found in strong year-end inventory levels, suggesting positive momentum for the first-quarter of 2018. That said, we continued to see dispersion in performance, with the Am Law 50 firms far outperforming the rest of the Am Law 200.
These results are based on a sample of 189 firms (81 Am Law 100 firms, 53 Second Hundred firms and 55 niche/boutique firms). Thirty-three of these firms fit our definition of either “international” (less than 25 percent but more than 10 percent of lawyers based outside the United States), or “global” (at least 25 percent of lawyers based outside the United States). Firms with less than 10 percent of lawyers based outside the United States are classified as either “national” (less than 50 percent of total lawyers based in headquarter office), or “regional” (greater than 50 percent of lawyers based in headquarter office). Each quarter, the Law Firm 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. These reports, together with extensive discussions with law firm leaders, provide a comprehensive overview of current financial trends in the industry as well as forward-looking insight.
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