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Law firms had ‘very strong performance’ financially at 9-month point, new report says

By Debra Cassens Weiss

November 20, 2024, 12:22 pm CST

Law firm revenue in the first nine months of 2024 increased 12.8% from the same period last year, thanks mostly to increases in standard billing rates, according to a new report by Wells Fargo’s Legal Specialty Group.

At this same point last year, revenue had increased 4.6%, according to the report. The year-over-year revenue growth of 12.8% in the first three quarters was eclipsed only by growth rates of 14.4% in 2021.

“For the first nine months of 2024,” the report says, “the law firm industry experienced very strong performance, improving upon the momentum seen at the six-month mark.”

Revenue growth was highest for Am Law 50 firms, which are ranked based on gross revenue. They had year-over-year revenue growth of 14.6% at the nine-month point, compared to growth of 9.3% for firms in the Am Law Second Fifty and 10.1% for firms in the Am Law Second Hundred.

The “primary contributor” to revenue growth is the increase in billing rates, according to the report. Standard billing rates increased 9% from the same period last year. The year-over-year increase was 10% for Am Law 50 firms and 7% for Am Law Second Fifty and Am Law Second Hundred firms.

Net income is also up, Wells Fargo says, although the bank cautions that percentage increases can be “unusually large” in interim reporting because of the seasonality of collections and cash basis reporting. Net income increased 22.2% in the first nine months of the year, compared to the same period last year, while profits per equity partner increased 21.5%.

Law.com spoke with Owen Burman, a senior consultant for the Wells Fargo’s Legal Specialty Group, about the findings.

Financial growth is going so well that firms are “pinching themselves,” Burman said.

The report is based on information from more than 130 firms, including 70 Am Law 100 firms and 35 Am Law Second Hundred firms.