Law firms saw significant declines in the years after the 2007 recession, as clients cut costs and turned to in-house options, but they are showing modest although uneven growth again.
- According to IBISWorld, industry revenue is expected to grow by 1.9% in 2015 and “at an annualized rate of 1.4% to $292.0B by 2020. (Law Firms in the US, Sept. 2015, report 54111)
- Growth is uneven in the industry and may correspond to a “practice mix that meets current needs or the geographic variables of local markets.” Altman Weil’s Law firms in transition 2015.
- High growth sectors suggested by several sources include but are not limited to M&A activity, IPO’s, real estate, technology, and healthcare.
- The Hildebrandt Consulting/Citi Bank 2015 Client Advisory published Dec. 2014 also called for lower growth, with a widening gap among the firms. Winners include “those with strong brand-name transactional practices, or firms who have demonstrated value to their clients by offering quality work at the right price, while creating a well-managed cost structure to maintain or improve their margins.” Factors including “ill-conceived growth strategies; too much dependence on litigation; and top heavy, expensive leverage models” may have contributed to other firms’ lack of growth.
- The largest firms showed the most growth in 2014, while others saw a decline; that trend was expected to continue through 2015.
- All sources expect transactional work to grow and litigation to remain flat.
What does the future look like for the industry:
Revenue for the Law Firms industry is expected to grow “at an annualized rate of 1.4% to $292.0B by 2020. This will be fueled by a “projected increase in corporate profit and a stricter regulatory environment, both domestically and internationally.” (Law Firms in the US, IBISWorld, Sept. 2015, report 54111).
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