An unrelenting work surge is padding Big Law partners’ pockets while associates feel the burden of additional tasks, according to a Wells Fargo Private Bank survey.
Revenue grew 16.5% in the first six months of the year at the 50 largest U.S. law firms compared to the same period in 2020, the survey showed. Net income rose 38% at the firms compared with last year.
The firms’ associates are on pace to bill 1,817 hours on average this year; up nearly 10% from 1,652 hours a year ago, Joe Mendola, managing director in Wells Fargo’s legal specialty group, said in an interview.
Surging demand for lawyers to work on record numbers of capital markets deals and corporate transactions are driving the financial success. The work is driving up hours for junior lawyers, as firms struggle to hire enough associates to keep up with attrition.
“We know attrition is a concern for a lot of leaders of law firms,” Mendola said. “Money is not everything.”
Big Law firms have plied associates with bonuses and salary increases amid the record workload, but “that has not been enough to prevent the attrition uptick that is occurring today in the industry,” he said.
Mendola said the first half results were the strongest he’d seen during his 30-year career providing banking services for the legal industry, calling the financial success “mind-boggling.”
But attrition is a concern. Headcount at the top 50 firms was essentially flat from the year-ago period. Law firms ranked by revenue from Nos. 51-100 and 101-200 saw headcount decline 1.2% and 1.3%, respectively, Mendola said.
There are signs the momentum from the first half of the year will continue. The amount of uncollected bills and work in progress was up 11% from the year-ago period, suggesting firms have a buffer in the second half even if work slows down.
For now, though, the surge in work means law firms are operating at close to max capacity.
One rare spot of underperformance is the litigation market, which Mendola said has not recovered from court closures like he expected. “It could even be better,” he said, “which I can’t fathom.”