• Law firms could see one of their strongest years in 2024, driven by high demand and productivity growth.

• Citi Global Wealth at Work report indicates a 2.9% increase in demand and a 2.1% rise in productivity for the first half of 2024.

• Revenue increases by 11% across the industry.

• Overall lawyer head count and partner headcounts are increasing, contributing to overall growth in the sector.

Citi Global Wealth at Work has released a report predicting a record-breaking year for law firms in 2024, buoyed by significant demand and productivity growth during the first six months of the year. The H1 research confirms that the industry continued its momentum from the first quarter, despite an increase in expenses and more moderate head count growth, according to Law.com.

Report Findings

According to the six-month report, comparing H1 2024 results to the same period in 2023, the legal sector saw significant increase in demand, productivity and revenue. Those numbers are also up compared to Citi’s Q1 report.

• Demand Growth: A 2.9% increase in demand for legal services across the board.

• Productivity Boost: A 2.1% rise in productivity across law firms.

• Revenue Increases: Firms have seen their revenues climb by 11.4% as a result of the heightened demand and efficiency. 

• Higher Inventory: The collections cycle lengthened by 1.3% across the industry, but half, inventory also grew 12.8%. 

• Growing Expenses: Citi found expense growth at 6.9%, slightly higher than 6.5% in Q1, mostly driven by operating expenses.

"Law firms are reaping the benefits of both increased client activity and improved internal efficiencies," Gretta Rusanow, head of advisory services at Citi, commented on the findings. "This growth trajectory is reflective of a sector that has adapted well to recent challenges and is positioned for continued success."

Partner Headcounts

The Citi report also found that overall lawyer head count is up 1.2%, and all-partner head count is up 1.9%.

It should be noted that while some recruiters noted an increase in lateral partner activity relative to last year, Citi found a drop in equity partner head count (0.4%). However, the group found a 49% increase in income partner head count through the first six months of the year

Other Research Corroborates Growth

The positive outlook for law firms is not unique to Citi’s findings. Earlier this month, the Thomson Reuters® Institute Law Firm Financial Index (LFFI) for Q2  also indicated that law firms are back at record heights, with similar increases in demand and productivity. 

The Q2 2024 LFFI rose 8 points to a score of 67, one of the highest scores of all time and the third-highest level since the Global Financial Crisis. The positive outlook was driven by a rebound in transactional demand and the increased sustainability of law firms in the current market compared to previous peaks.