As the world becomes absorbed in the constant cycle of online news, the largest law firms are subtly but steadily consolidating their dominance over the legal market. This trend is not just a fleeting moment; it represents a broader shift in the dynamics of legal spending and client relationships.
If you’re curious about how nearly 50% of the Am Law 100 firms have achieved “super rich” status, look no further than the newly released 2025 CounselLink Trends Report. This comprehensive analysis of client spending patterns reveals that law firms employing over 750 attorneys account for an astonishing 49.3% of total legal expenditures. This figure translates to a staggering $67 billion in legal spending last year, underscoring the significant financial power these firms wield in the industry.
The financial stability of these firms ensures that their lavish budgets for luxuries, including yachts, remain intact.
However, one must wonder how these firms continue to thrive amidst the incessant chatter from legal departments about “spend control” and their frustrations regarding escalating billable rates. For years, clients have voiced their concerns to law firms and anyone willing to listen. What has been the response from these large firms?
In 2024, partner rates saw an average increase of 5.1%, marking the second most significant rise on record. However, this statistic only tells a fraction of the complete story. Among the largest firms—those capturing nearly half of the legal spend—the median partner’s billing rate is an astonishing 61% higher than that of their counterparts in smaller firms. Partners in major firms are charging over $2,300 per hour, while the top-tier associates are billing at rates of $1,900 per hour, illustrating the financial landscape of elite legal services.
While clients may proclaim their strategies for managing the “timekeeper mix,” partners continue to send invoices that could rival the cost of extravagant events like a Fabergé Easter Egg hunt. The adage “no one gets fired for hiring Cravath,” or its various iterations, remains a steadfast truth in the industry. Despite ongoing complaints from clients about increasing costs, when a company’s reputation is on the line, boards are inclined to prefer the security of well-known brands, even at a premium price.
Subsequently, this leads to the inevitable threat to legal budgets in the following fiscal year. It’s a cyclical pattern that echoes throughout the industry.
An equally intriguing development is the steady rise of smaller law firms, which, although overshadowed by Biglaw, hold a substantial share of the legal spending landscape, accounting for nearly 25% of the total.
While small law has experienced a slight decline since 2022, the firms with 201-750 lawyers are reaping the benefits, alongside the continuous financial influx into Biglaw. Remarkably, these mid-sized firms have maintained a competitive edge against larger rivals, especially considering their lower billing rates, which allows them to capture a significant portion of legal expenditures.
This situation creates a “dumbbell effect” in the legal market, where massive firms dominate one end, while specialized boutique firms occupy the other. In the middle, mid-sized firms face intense pricing pressures and existential challenges. Observing the potential growth of mid-sized firms could be insightful in the coming years, especially as they slowly adopt advanced technologies. This tech adoption may enhance their competitiveness against larger firms that leverage technology for efficiency, and smaller firms that utilize tech out of necessity.
On an unrelated note, have you heard that scientists are attempting to resurrect the Woolly Mammoth? While this may seem tangential to our discussion, it provides an interesting segue into the next topic.
The report does not explicitly address the metaphorical Woolly Mammoth in the room: the impact that generative artificial intelligence tools could have on how clients allocate future legal work. The legal technology community may refer to it as the elephant in the room, but it might be more appropriate to view it as a groundbreaking yet currently absent force. While generative AI generates considerable hype, it has yet to convince in-house lawyers to abandon their reliance on external counsel. Nevertheless, even if it doesn’t replace lawyers, it is poised to significantly alter legal workflows and, by extension, affect billing practices.
Will this lead to the emergence of the $10,000/hour lawyer? Will clients finally push back against such inflated costs? Alternatively, could this trend encourage more alternative fee arrangements, either for entire cases or for predictable deliverables at specific stages of a project? Which firms will be the pioneers in establishing a new billing model?
Or perhaps firms will simply continue their trend of increasing payments while expressing dissatisfaction. Why fix what isn’t broken?
2025 CounselLink Trends Report [LexisNexis CounselLink]
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