Law Firms

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 162,800 law firms 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 the budgets of their legal departments, forcing them to reduce 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 $1.8 million in annual revenue.

    • There are about 162,800 law firms in the US with over 1 million employees and generating about $295 billion in annual revenue.
    • Another 292,500 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
                                Source: Vertical IQ and Inforum

                                Coronavirus Update

                                Apr 19, 2022 - Virtual Firms Draw Top Talent
                                • Big Law partners are increasingly landing at virtual law firms, according to The American Lawyer. Big Law is the term used in the legal industry to describe the country's largest and most successful law firms, which are usually headquartered in major cities, such as New York, San Francisco, Chicago, or Los Angeles. A virtual law firm is a legal practice that operates from the homes or satellite offices of its lawyers rather than a single brick-and-mortar location. Virtual firms without billable hours requirements have been drawing top talent since the pandemic began. The ability to work from anywhere and greater freedom to manage personal time are cited as key draws. Still, many attorneys are pointing to the billable hours requirement on which much of the industry has predicated its success as an area that is ripe for change.
                                • The legal industry is returning to offices at a higher rate than office workers in general. As of March 31, average office occupancy in the legal industry was more than 71%, according to security firm Kastle Systems. The overall office occupancy rate was 43.1%.
                                • Many law firm clients are now open to continuing litigating in a virtual environment when the pandemic ends, according to a study commissioned by insurance law firm Wilson Elser Moskowitz Edelman & Dicker. The vast majority (87%) of respondents said that they had favorable reactions to virtual workers' compensation hearings during the pandemic, versus 13% who had negative reactions, while 76% of respondents had favorable reactions to virtual mediations versus 24%. Barely half of respondents (54%) had a positive opinion toward conducting depositions virtually. Almost three-quarters of respondents who had experienced a virtual trial (72%) said that they found them to be more detrimental than beneficial. The virtual medium is increasingly seen as the way forward for some litigation management techniques. Almost 80% of respondents said that they now preferred virtual strategy meetings as a default way of doing business, while just over half said that a virtual venue should be the default for settlement conferences. Only 49% felt that mediations should regularly be virtual, while just 43% supported the virtual environment as the default for non-plaintiff depositions.
                                • The Biden administration has asked law firms and law schools to help fight evictions following a US Supreme Court decision in August 2021 to block an eviction moratorium. More than 40 major law school deans have since committed their students and law clinics to the endeavor, according to Biden administration officials. These include Harvard, Yale, Stanford, Columbia, Howard University, and UCLA Legal Services Corporation. The American Bar Association and the National Housing Law Project have also made commitments.
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