Big Law Finds Renewed Strength at the Top, But Little Elsewhere in Q2 PMI Report

Topics: Data Analytics, Law Firm Profitability, Law Firms, Leadership, Legal Innovation, Midsize Law Firms Blog Posts, Peer Monitor, Thomson Reuters

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EAGAN, Minn. —The large law firm market slowed across several key metrics including demand, rates and productivity in the second quarter of 2017, with only the Am Law 100 showing any demand growth during Q2, according to the Thomson Reuters Peer Monitor Index (PMI).

The PMI, a metric produced by Thomson Reuters’ Peer Monitor which measures the relative health of the U.S. large law firm market, fell 3 points to 50. The PMI 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. A PMI of 65 or greater indicates strong law firm market performance.

In Q2, demand for the large law firm market was down 0.1%. Year-to-date, demand growth is nearly neutral, up barely 0.1%. Only the Am Law 100 market segment showed demand growth during the second quarter, while demand fell for Am Law Second Hundred and Midsize Law Firms (those law firms outside the largest 200). The Am Law 100 also was the only market segment with positive demand growth through the first six months of this year.

PMI Report

Levels of legal work, where it could be found, was mixed, as were transactional practices. Corporate practices were flat despite continued growth in M&A activity; and real estate work declined. However, tax work was up during the quarter. Further, litigation work fell 2%, but the decline was not across all segments. Am Law 100 firms saw flat demand for the quarter, and have grown litigation 0.2% year-to-date. Meanwhile, the other market segments, Am Law Second Hundred and Midsize Law Firms, saw litigation decline both in the second quarter and year-to-date.

“While the overall market continues to struggle to find traction this year, we are seeing signs of improved strength across ‘Big Law,’” said Mike Abbott, vice presidentof Client Management and Global Thought Leadership at Thomson Reuters. “The market tier made up of the largest firms is showing more widespread stability and growth than their smaller counterparts.”

In recent years, while many of the largest firms have been able to hold their own or even grow, some large firms had seen portions of work shift to more down-market segments, often in search of more cost-effective options, Abbott said. “We are now seeing a greater flow of ‘big ticket’ work such as litigation and M&A to the ranks of the largest national and global firms.”

You can download a copy of the Q2 2017 PMI report here.