Demand for legal services has gone up in Q3 2024, according to the Q3 2024 Thomson Reuters Law Firm Financial Index (LFFI).
The LFFI score for this quarter hit 71 – the second-highest score in the report’s history, Thomson Reuters said.
The report indicated that overall demand increased by 3.6% compared to Q3 2023. In terms of countercyclical practices, demand for litigation ticked up by 4%, while demand for labor and employment went up by 2.9%. Thomson Reuters noted that in Q3, growth in countercyclical demand was at its strongest pace in over a year following two quarters that displayed signs of countercyclical practice slowdown.
Transactional practice demand was at its highest since early 2022; in particular, demand in real estate grew by 3.7%. Thomson Reuters noted that the considerable increase in fees during this period could be attributed to higher billing rates. This improvement had a strong chance of sustainability over the long term, given the growth across different practice areas.
Worked rate growth in Q3 came in at 6.5%, buoyed by significant growth in Q1 and Q2. Lawyer productivity also rose, with 64% of firms reporting productivity growth.
Moreover, the hiring season in Q3 was the first in three years to see firms log both full-time equivalent growth and productivity gains.
“The continued climb in law firm average productivity – in stark contrast to previous years – is a key factor boosting law firm profitability,” said Raghu Ramanathan, president of Legal Professionals at Thomson Reuters. “Law firms that not only invest in new technology but also adopt AI and generative AI solutions to streamline workflows and improve the efficiency and quality of their work will be best positioned to improve client satisfaction and experience sustained productivity growth.”
The LFFI was published by the Thomson Reuters Institute based on data from Financial Insights. The data is obtained from major law firms in the US and other international markets.