Law Firms NAICS 541110

May 29, 2025 - Federal Judges Strike Down Executive Orders Targeting Law Firms

• Federal judges in May 2025 blocked executive orders (EO) from the White House targeting law firms Perkins Coie, Jenner & Block, and Wilmer Hale. The rulings were the biggest repudiation yet of the Trump administration’s strategy of using EOs to target firms that previously worked for Trump’s political rivals or acted as legal opponents in his civil trials. The EOs are roiling the legal industry and triggering a variety of responses. Several big firms, including Paul Weiss and Skadden, have agreed to about $1 billion in pro-bono work for the Trump administration in exchange for dropping the orders, which stripped them of federal security clearances, banned their lawyers from federal buildings, and cancelled government contracts for legal services. The challenges from targeted law firms accused the federal government of retaliation against them based on who they choose to represent and employ.
• The Trump administration is facing an average of two lawsuits a day over its attempts to radically overhaul the government through executive orders. Law firms have filed more than 220 lawsuits against the federal government by fired federal workers, immigration advocacy groups, Democratic state attorneys general, grant recipients and corporate law firms, among others. Given the speed and breadth of the executive orders, law firms have been proactively sending clients analysis on legal challenges, webinars, and putting together task forces and creating websites to track and explain all the changes as best they can. Corporate clients especially want to know if they are being targeted for running afoul of anti-DEI initiatives, according to leading law firms.

• Profits at law firms were up a substantial 11.5% in the third quarter of 2024 - a near record - according to the Law Firm Financial Index, published by Thomson Reuters. Most of the gains came from an increased focus on litigation and bankruptcies. It could be a short-lived boost, however, when taken along with an anemic 3% growth rate in Q4 in demand for legal services. Other complicating factors for law firms at the end of the year include bonus payments, increased operational costs, and significant technology investment - all of which could squeeze profits heading into 2025. Per the Thomson Reuters Institute, lawyer productivity was also down 0.4% in the fourth quarter, which was a byproduct of increased hiring and a shifting demand away from litigation and towards corporate law. When demand is down, law firms tend to increase billing rates to mitigate profit losses.
• The alternative legal services (ALS) market, which provides clients with services not performed by a traditional law firm, has grown to a $28 billion business according to a report issued jointly by the Thomson Law Institute, Georgetown Law School, and the University of Oxford. Corporations and law firms are increasingly using ALS providers as a way to reduce in-house legal costs and or take advantage of specialized industry-specific services such as technology or project management. Other ALS services include access to temp lawyers and paralegals, software services, research and consulting. Most of the growing market (almost 90%) is made up of independent companies. The rest comes from “captive” law firm subsidiaries and affiliates, as well as accounting companies. Roughly one-third of law firms report having some sort of ALS unit.