Over the course of the global pandemic in 2020, large law firms implemented multiple strategies to address the industry challenges they were experiencing, leading to a strong improvement in law firm performance toward the end of the year.
As a result, the Thomson Reuters Peer Monitor Economic Index (PMI) jumped 11 points in the fourth quarter to 69 — the index’s highest mark since 2006, and its second-highest mark ever.
In Q4, demand for law firm services still remained down, but only slightly, relative to the fourth quarter of 2019. Yet, the gradual recovery in legal demand that started after its sharp fall in the second quarter of 2020 as the pandemic took hold continued through the fourth quarter.
You can download a copy of the PMI report for Q4 of 2020 here.
“Law firms demonstrated their resilience in 2020, taking swift, decisive measures to adjust to the many difficulties brought on by the COVID-19 pandemic,” said Mike Abbott, vice president of Market Insights and Thought Leadership at Thomson Reuters. “Proactive rate strategies, aggressive cost cutting, successful remote-working models, and increased investment in productivity-enhancing technologies all helped produce positive results in the face of unprecedented challenges.”
The fourth quarter also reflects many of the extremes that large law firms have experienced recently. In the fourth quarter, for example, rates, revenues, and productivity were all at some of the highest levels seen over the past several years. Overall expenses fell as firms slashed office expenses and business development costs; and lawyer headcount contracted as firms put the brakes on hiring, trying to better balance supply with demand.
The PMI, produced by Thomson Reuters, is a composite index of law firm market performance using real-time data drawn from major law firms in the United States and key international markets.
You can find more information on Peer Monitor here.