August 26 (Reuters) – Major U.S. law firms reported impressive financial results for the first half of 2024, driven by robust billing rates and increased demand, according to a report released by Wells Fargo on Monday. The analysis highlights that the top-grossing firms outperformed other segments of the legal market during this period.
Revenue for these firms surged by an average of 11.4% compared to the first half of 2023, marking a significant improvement from the previous year’s 4.4% growth, which had been hindered by productivity challenges. This uptick in revenue is attributed to rising billing rates and a heightened demand for legal services, as noted by Wells Fargo’s Legal Specialty Group. The group’s survey encompassed over 130 firms, including 66 of the top 100 highest-grossing law firms in the U.S.
This performance represents the most favorable first half since 2021, driven by renewed activity in capital markets, mergers and acquisitions (M&A), and various practice areas such as litigation, restructuring, antitrust, and investment management. These sectors have continued to contribute to the overall revenue growth, according to the survey.
Among the top 50 highest-grossing U.S. law firms, revenue grew by a notable 13.8% during the first half of 2024. In contrast, the second tier of 50 firms experienced a 7% increase, while the next 100 firms saw an 8.8% rise in revenue. Kirkland & Ellis, the leading U.S. law firm in terms of revenue in 2023, reported earnings of $7.2 billion, as highlighted by The American Lawyer.
Owen Burman, a senior consultant at Wells Fargo’s Legal Specialty Group, noted that the top 50 firms are “significantly outperforming” their peers, largely due to superior rate growth and realization rates. The overall demand for legal services saw a 3.1% increase, with this growth being consistent across various firm tiers. However, the top 50 firms experienced a 10% rise in standard billing rates, compared to 7% for the other tiers.
The survey also revealed an average productivity increase of 1.5% across firms, alongside a 12.8% growth in inventory and a 7% rise in expenses.
These findings align with other recent industry reports that indicate strong financial performance within the legal sector for 2024. Earlier this month, Citigroup’s Global Wealth at Work Law Firm Group released similar data, showing an 11.4% increase in revenue and a 2.9% rise in demand for the first half of the year. Their survey, which covered 192 law firms including 81 of the top 100 highest-grossing firms, also reported a 6.9% increase in expenses and a 1.2% growth in headcount.
The data underscores a period of financial prosperity for U.S. law firms, reflecting an ongoing recovery and growth in the legal market.