Law Firm Revenue Growth Expected to Dip in 2020, Report Says

Revenue at U.S. law firms grew 4.6% in 2019, and law firm management expects that figure will dip to 4.4% for full-year 2020, according to a report released by Wells Fargo Private Bank.

Net income for the 150 law firms Wells Fargo surveyed was up 3.9% from the prior year and demand grew 1.4%, the Wells Fargo report said Monday.

The 2019 results faced a difficult comparison from 2018, when law firms turned in a decade-best performance and saw revenue grow nearly 6% and net income surge 7.6%.

“The industry successfully overcame headwinds including the government shut-down, geopolitical conflicts, and slowing economic growth to deliver solid results this year,” the report said.

The 50 largest firms reported 6.7% revenue growth while the Am Law Second Hundred firms grew their top-line figure at 3.6% from the prior year.

That big-get-bigger trend is expected to continue this year.

Leaders of the 100 largest firms expect revenue growth of 5.5% this year compared to 3.3% of the firms ranked 101-200. The firms are more optimistic about demand growth, projecting it to grow by 2.9% this year. The report says that figure “seems unusually strong in light of historical growth.”

In a separate report released Monday, Thomson Reuters said demand growth, measured by hours billed, for full-year 2019 was 1%, which was the same as in 2018. The report also said law firm billable rates grew 4% in 2019, which was the highest rate since 2011.