Law firm growth accelerates, with richest firms in the lead

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Lawyers walk with their briefcases towards the federal court house in San Diego, California
Lawyers walk with their briefcases towards the federal court house in San Diego, California June 22, 2015. REUTERS/Mike Blake
  • Wells Fargo report finds revenue up 14%, demand up 7% during first nine months of 2021
  • Bank says growth driven by demand, not rate increases

(Reuters) - U.S. law firm revenue climbed 14% during the first nine months of 2021 over the same period last year, Wells Fargo Private Bank's Legal Specialty Group said Monday.

Revenue jumped by 17% on average among the 50 highest-grossing U.S. law firms as ranked by The American Lawyer, compared to a 10% increase for lower-ranked firms, Wells Fargo said. More than 90% of the 120 law firms surveyed by the bank reported an increase in revenue.

"Revenue growth was led by strong demand and not rate increases which was the case in recent years," Joe Mendola, senior director of sales for Wells Fargo Private Bank Legal Specialty Group, said in a statement.

Demand during the first nine months of 2021 was up 7% overall, with the highest-grossing firms seeing more hours logged than their smaller counterparts, Wells Fargo found. U.S. law firms have found themselves in the middle of a global M&A boom that surpassed more than $4 trillion in deal value by the end of the third quarter.

Wells Fargo's findings track with the latest Thomson Reuters Peer Monitor Index, released last week, which found in the third quarter that demand was up 4.4% quarter-over-quarter, with productivity and rates also on the rise. Wells Fargo also found that rates and productivity were up during the first nine months of 2021.

Law firm expenses have grown along with demand, as firms break out their checkbooks in an effort to attract and retain associates. Wells Fargo found that compensation expenses grew by 11.5% during the first nine months of this year.

Top U.S. law firms hiked first-year associate salaries as high as $205,000 this year, while also shelling out a series of special bonuses.

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David Thomas reports on the business of law, including law firm strategy, hiring, mergers and litigation. He is based out of Chicago. He can be reached at d.thomas@thomsonreuters.com and on Twitter @DaveThomas5150.

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