Law Firms Saw Moderate Revenue Growth In Q1 Despite Challenging Demand Environment

These results are based on a sample of 193 firms (81 Am Law 100 firms, 53 Second Hundred firms and 59 niche/boutique firms). Forty-three 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's Global Wealth at Work Law Firm Group provides financial services to more than 900 law firms around the world and approximately 50,000 lawyers. Each quarter, the 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.

Revenue grew by 4.4% in the first quarter of 2023, resulting from the collection of some of the high levels of accounts receivable seen at the end of 2022 together with strong growth in the value of billable hours. Firms told us that while December 2022 collections were disappointing, they saw comparatively better collections during January and February. That said, the collection cycle continued to lengthen by 4% while demand declined by 2% as market uncertainty continued to keep capital markets and corporate transactional practices eagerly waiting for deal flow to pick up. On the other hand, litigation and bankruptcy and restructuring work is robust at many firms, as we would expect to see during a down cycle. There has also been no shortage of regulatory investigations work. Investment management, intellectual property and antitrust practices have also reported strong activity levels.