Law Firm Revenues Rise as Demand Accelerates, Citi Reports

These results are based on a sample of 190 firms (76 Am Law 100 firms, 54 Second Hundred firms and 60 niche/boutique firms). Thirty-one of these firms fit our definition of either international (less than 25% but more than 10% of lawyers based outside the United States) or global (at least 25% of lawyers based outside the United States). Citi Private Bank provides financial services to more than 700 U.S. and U.K. law firms and more than 50,000 individual lawyers. 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 semiannually produce the Law Firm Leaders Confidence Index. 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.

Revenue growth of 5.1% for the first nine months of 2019 was driven largely by lawyer billing rate growth of 4.7%, as demand grew 0.9%. Each of these metrics saw accelerated growth from the first-half industry results. Indeed, demand growth accelerated from just 0.1% growth during the first six months, and this continued improvement in the demand environment mirrors what we had been hearing throughout the third quarter from our clients. The one metric that continued to hurt revenue growth was the 1.5% lengthening of the collection cycle. While this is slightly less than the 1.6% lengthening we reported during the first half, this is a continuation of a prolonged trend, and is largely driven by clients taking longer to pay bills. Looking toward what might be possible for full-year revenue growth results, inventory growth was strong at 6.7% and should continue to provide collections momentum into the fourth quarter.