Law Firms
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 159,000 law practices in the US provide advocacy and advisory services to businesses, non-profit organizations, individuals, and government agencies. The practice of civil law accounts for 94% of the legal industry’s revenue, while criminal law accounts for only 4%.
Client Cost Cutting
Businesses have cut their legal budgets, resulting in reduced spending on outside legal services.
Alternative Fee Arrangements
Driven by client demands for cost containment, firms are offering alternatives to the traditional billable hour model.
Industry size & Structure
The average law firm operates a single location, has 6-7 employees and generates $2 million in annual revenue.
- There are about 159,000 law firms in the US with over 1 million employees and generating about $343 billion in annual revenue.
- Another 290,300 lawyers practice solo.
- The industry is highly fragmented with the 20 largest law firms representing less than 10% of revenue.
- The largest US law firms by revenues are Baker McKenzie; Skadden, Arps, Slate, Meagher & Flom; Latham & Watkins; Jones Day; and Kirkland & Ellis.
Industry Forecast
Law Firms Industry Growth
Recent Developments
Jun 28, 2024 - Steady Industry Sales Growth
- Law firms’ sales are expected to notch moderate growth over the next several years. The industry’s year-over-year sales rose 3.2% in 2022 before rising to 4.5% growth in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales are projected to moderate to 2.4% growth in 2024 and 3.5% in 2025, then see average annual growth of about 3.5% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
- There is a significant gap in salaries for new lawyers, depending on where they attended law school, according to a recent report by Georgetown University’s Center on Education and Workforce. The report found that the median lawyer salary in the US four years after graduating from law school was $72,000 after subtracting debt payments. The median salary for lawyers who attended seven of the country’s elite law schools was more than $200,000, minus debt. Four years after graduating, the median salary for graduates of the 33 lowest-ranking law schools was $55,000 or less.
- The Pennsylvania Bar Association and the Philadelphia Bar Association recently issued a joint opinion outlining ethical guidelines for lawyers using generative AI. The guidance suggests that lawyers have the same ethical obligations to consider when using AI as they would in any other technology, such as using e-discovery software or protecting clients’ digital data. However, the opinion’s authors stressed that generative AI is unique in its ability to generate text, which can include errors known as “hallucinations.” Lawyers must perform the necessary due diligence to ensure any AI-generated legal work is correct.
- Most employees of large law firms are satisfied with their employer’s office attendance policies, according to a recent survey by Thompson Reuters. About 57% of law firm workers said they were “satisfied” with their office attendance policies, and 29% were “neutral.” Only 13% of those surveyed said they were “not satisfied.” It seems few large law firms require five in-office days per week, and some even were surprised that office attendance levels often exceed firm requirements.
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