Welcome back to the Big Law Business column. I’m Roy Strom, and today we look at the eerily similar growth rates of the NFL and Big Law. Sign up for Business & Practice, a free morning newsletter from Bloomberg Law.
About 10 weeks into a wintertime paternity leave, the monotony of being stuck inside changing diapers and warming up bottles began to overwhelm me. I needed a night to cut loose.
So, I went to a book signing.
I guess I’m a nerd dad.
The book was “Football,” an effort by author Chuck Klosterman to argue that America’s most dominant sport won’t stay at the top much longer. The event was fun, and the book is a good read. Lawyers should enjoy an author who admits to being obsessed by “unwinnable arguments waged against” himself “for no explicable motive.”
But reading the book became work. As Klosterman unspooled his argument that the NFL is doomed by its own success, I quickly began to see parallels to Big Law.
Like I said: Nerd dad.
Klosterman argues the NFL will implode in some 30 or 40 years—despite its current position as the most financially dominant sport in the US. He foresees a never-ending dispute between owners and players who can’t figure out how to equitably split a revenue pie in terminal decline.
If you think about Big Law all the time, like I do, it’s not hard to see similarities to the law firm business. Law firms have been on a torrid growth streak that’s made lawyers some of the highest-paid professionals in the country. A defining feature of law firms is that they can struggle to survive even small, short-term declines in revenue.
The NFL’s recent growth story has been eerily similar to the 100 largest US law firms by revenue. They both achieved the same compound annual growth rate of about 6.5% for similar 15-year stretches. (Note: It’s not the first spurious correlation this column has found between the NFL and Big Law.)
One thing we know about the law firm business model is that it quickly destabilizes when profits begin to fall. In other words, its success is based on assuming long-term growth. A well-known academic paper attributes law firms’ frailty to partners refusing to collectively shoulder a shrinking profit pool. What would happen if the entire industry was shrinking?
Klosterman’s diagnosis of the NFL’s demise boils down to his view that advertisers will eventually realize paying to air commercials during NFL games is not money well spent. The TV networks, in turn, will stop paying the league ever-higher fees for the rights to broadcast games.
The advertisers will balk, Klosterman says, because the league’s explosive growth will eventually require TV networks to charge advertisers insane sums. The league is projected to pull in $25 billion in revenue in 2027, Klosterman writes. Carrying on its growth trajectory implies it will bring in more than $100 billion in 2050 and more than $200 billion by 2065.
The math behind his numbers suggests he was applying the NFL’s recent compound annual growth rate of 6.6% to future years.
Those numbers are big, but they don’t seem impossible to me.
Applying a similar analysis to Big Law, on the other hand, generates numbers that really don’t work. Big Law has achieved the bulk of its revenue growth in recent years by increasing billing rates. The strategy has not met much pushback, suggesting the firms are providing good value to clients. It becomes harder to maintain as Big Law grows. A finite number of billable hours will eventually have to be priced dramatically higher than they are now.
If you run the top 100 law firms’ 6.7% annual growth rate out to 2050, you get a group that is pulling in more than $875 billion in revenue.
The top 100 law firms combined generated about $155 billion in revenue in 2024, according to The American Lawyer. It’s about the same as Home Depot. No company existed in 2024 that did $875 billion in business.
That’s a world where the average top 100 law firm would rake in nearly $9 billion in revenue—a number only likely to be breached by one firm for the first time last year. Kirkland & Ellis would do nearly $50 billion in business if it kept its current share of the group’s revenue.
The exercise leads to a feeling that Big Law’s prevailing business model must be near the peak of its financial success. Or at the very least, that such heady growth won’t continue.
Maybe a more efficient Big Law, achieved with the help of artificial intelligence, is the answer to the problem?
What would the economics of a Big Law that big look like?
One problem is there likely won’t be enough lawyers for the largest firms to grow body count enough to make the unit economics look anything like they do today. That means hourly rates would have to skyrocket.
The top 100 firms have grown their total headcount by roughly 3% a year from 2015 to 2025, according to data from The American Lawyer. If that continues to 2050, there would be 255,000 lawyers at the top 100 firms—roughly double the 124,000 today. Demographic trends suggest there will be fewer law school graduates in 25 years; not twice as many.
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If the number of lawyers at the top 100 firms stayed constant, and the amount of hours they billed remained the same, billing rates would have to more than quadruple to generate the projected revenue by 2050.
Associates billed out at $1,000 an hour today would cost close to $5,000 an hour. Partners charging $4,000 an hour today would be asking for $20,000 an hour. Even if lawyer headcount grew by 25%, billing rates would have to triple.
Nobody can predict today what Big Law will look like in 2050 and I’m certainly not suggesting this scenario will happen.
Bruce MacEwen and Janet Stanton of Adam Smith Esq., the law firm consultancy, point out that no analysis of the future should assume the status quo prevails forever. A more likely future would assume law firms grow at a similar rate to their clients, they said.
Another model could make more conservative assumptions. If headcount grew 1% a year, and billing rates rose 3% a year (roughly in-line with inflation expectations), the top 100 law firms would see their top line grow 67% by 2050—to about $260 billion.
That may be a more likely future for the vast majority of law firms. But there is still a problem: Law firms have outperformed that projection for years now. MacEwen and Stanton foresee a future where some of the elite firms continue on their current trajectory while the rest settle into more tempered growth.
“We’ll see more segmentation,” Stanton said.
Lawyers are not entertainers, at least in their day jobs. They play a central role that means they won’t just go out of style and fade away, like horse racing has—or how football might.
It is naïve to assume nothing changes over a 25-year period. But I’m also torn, because the basics haven’t changed in Big Law over the past 25 years.
Either way, the analysis highlights a question that will only become more urgent: At what point will clients begin to feel that paying Big Law’s rates simply isn’t worth it? And what happens when they do?
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