The global trade war has really shaken things up for law firms in the first quarter of 2025. According to a report by the Thomson Reuters Institute, almost every major practice area for law firms saw a boost, which is great news, right? Well, not really sure why this matters, but the months ahead are looking a bit rocky, to be honest.
Client demand for legal work surged in March due to the trade war, flooding law firms with work. On the bright side, firms were able to increase their rates by 7.3% compared to last year. This aggressive rate increase is the highest since 2005, so that’s something to celebrate, I guess. However, there are concerns about the long-term effects of the deteriorating U.S. economy on transactional work, which is a key performance indicator for large law firms.
In the report, there was a mention of a similar surge in legal demand back in 2007 when financial markets took a hit. This led to a significant decrease in demand and pricing power for law firms. It took almost a decade for law firms to rebuild their demand for transactional and counter-cyclical practices to pre-financial crisis levels. Counter-cyclical practices like litigation, bankruptcy, and labor and employment tend to rise in a slowing economy, so maybe it’s just me, but this could be a sign of things to come.
