Key points:
- Average law firm revenues rose 11.3% in the first half of 2025, with partner profits up 13.7%.
- Billing rates jumped 9.2%, with top partners now charging over $3,000 an hour.
- Firms are absorbing rising costs tied to AI adoption, salaries, insurance, and office space.
- AI’s impact on the billable hour model remains uncertain as firms weigh long-term economics.
Major U.S. law firms are posting strong revenue growth, but expenses are climbing nearly as quickly. A new survey from Wells Fargo’s Legal Specialty Group shows that law firm revenues rose 11.3% in the first half of 2025 compared to a year earlier, while profits per equity partner grew 13.7%. Billing rates, which climbed 9.2%, are driving much of the expansion.
At least three firms—Milbank; Quinn Emanuel Urquhart & Sullivan; and Susman Godfrey—have partners billing at more than $3,000 per hour. Milbank’s Neal Katyal, a former acting U.S. solicitor general, set a new high at $3,250. “It’s very strong growth, and rates are a huge part of it,” said Wells Fargo consultant Owen Burman. Still, he cautioned that firms are simultaneously carrying the costs of both traditional staffing and new AI investments: “In the meantime, you have both the associates and the AI, and there aren’t any expense savings right now, it’s just expenses.”
Overhead expenses excluding attorney compensation increased 8.6% in the first half of the year, driven largely by technology investments, while overall expenses rose 9.5% with compensation factored in. Firms are also contending with higher insurance and real estate costs, according to Fairfax Associates principal Kristin Stark. “Expenses are up across the board,” she said.
Consultants warn that AI could eventually disrupt the economics of billing. Bruce MacEwen of Adam Smith Esq. noted that the billable hour “doesn’t make economic or commercial sense” if generative AI can draft lengthy motions in minutes. Others, like consultant Peter Zeughauser, are more cautious, pointing out that earlier technological advances such as e-discovery did not force a shift to value billing. For now, firms are maintaining the billable model while absorbing new technology costs.
The broader legal market remains strong. Law schools saw an 18% increase in applicants this year, while recent graduates recorded record employment rates, reinforcing the steady pipeline of new lawyers. Meanwhile, high-profile disputes continue to test the industry’s economics: Epic Games’ lawyers at Cravath are seeking more than $205 million in fees for prevailing against Google in antitrust litigation, and defunct firm Schnader Harrison faces new litigation over unpaid rent in New York.
