In its latest Law Firm Financial Index, Thomson Reuters compares the legal market to the eye of a storm. Perhaps. Though the thing about the eye of a storm is you know you’re halfway to the other side, and there’s not much to suggest the looming danger will let up any time soon. There’s an eerie calm before someone releases a family of rabid opossums in your house too, but it’s a lot harder to soothe yourself knowing “this too shall pass” in that scenario.
For law firms, Q2 came and went without much drama. Demand was up — slightly — and remarkably stable, showing the least volatility since 2020 and some of the lowest volatility since the Great Recession. But the headline for this report might as well read: “Everything’s Fine, Which Is Exactly Why You Should Panic.” The report paints Q2 2025 as the legal market’s equivalent of that awkward silence in a horror movie when the dog stops barking.
Clients sought out more advice, but that’s more indicative of the uncertain economic environment. More alarming, the report suggests that realization rates dipped last Q2, which could signal clients taking a turn for the stingy. This could be the round of polite ghosting that precedes an eventual collections bloodbath. The fact that the best growth came from notoriously countercyclical litigation and M&A sputtered after starting the year on a high and you can see why this “calm” worries people.
Meanwhile the costs just keep adding up and, in true 2025 form, a large part of that is the AI arms race.
Interestingly, after years of the Biglaw elite driving the business numbers for the industry, it’s the midsized and Second Hundred firms enjoying a lot of the benefits from last quarter.
The picture becomes even more complicated when we look at each law firm segment. Am Law 100 firms saw a decline in demand growth in Q2, especially in their corporate practices. At the same time, the Am Law 1-50 firms continued to sharply limit their lawyer head-count growth. Midsize and Second Hundred firms, by contrast, greatly accelerated their demand performance across most practices. This surge in demand was enough to elevate these firms’ fees worked growth above that of the Am Law 100, offsetting Am Law 100 firms’ advantage in worked rate growth.
If we must stick with the meteorological references — as we should in honor of the federal government putting out a mass call to hire weather professionals at a premium after Elon fired everyone with no plan — is this an “eye” or the “calm before the storm”? The latter at least conveys that there’s no way of knowing when this is going to end.
Or the rabid opossum thing.
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter or Bluesky if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
The post Second Quarter Delivered Eerie Calm For Law Firms Waiting For Tariff Economy Slump appeared first on Above the Law.
In its latest Law Firm Financial Index, Thomson Reuters compares the legal market to the eye of a storm. Perhaps. Though the thing about the eye of a storm is you know you’re halfway to the other side, and there’s not much to suggest the looming danger will let up any time soon. There’s an eerie calm before someone releases a family of rabid opossums in your house too, but it’s a lot harder to soothe yourself knowing “this too shall pass” in that scenario.
For law firms, Q2 came and went without much drama. Demand was up — slightly — and remarkably stable, showing the least volatility since 2020 and some of the lowest volatility since the Great Recession. But the headline for this report might as well read: “Everything’s Fine, Which Is Exactly Why You Should Panic.” The report paints Q2 2025 as the legal market’s equivalent of that awkward silence in a horror movie when the dog stops barking.
Clients sought out more advice, but that’s more indicative of the uncertain economic environment. More alarming, the report suggests that realization rates dipped last Q2, which could signal clients taking a turn for the stingy. This could be the round of polite ghosting that precedes an eventual collections bloodbath. The fact that the best growth came from notoriously countercyclical litigation and M&A sputtered after starting the year on a high and you can see why this “calm” worries people.
Meanwhile the costs just keep adding up and, in true 2025 form, a large part of that is the AI arms race.
Interestingly, after years of the Biglaw elite driving the business numbers for the industry, it’s the midsized and Second Hundred firms enjoying a lot of the benefits from last quarter.
The picture becomes even more complicated when we look at each law firm segment. Am Law 100 firms saw a decline in demand growth in Q2, especially in their corporate practices. At the same time, the Am Law 1-50 firms continued to sharply limit their lawyer head-count growth. Midsize and Second Hundred firms, by contrast, greatly accelerated their demand performance across most practices. This surge in demand was enough to elevate these firms’ fees worked growth above that of the Am Law 100, offsetting Am Law 100 firms’ advantage in worked rate growth.
If we must stick with the meteorological references — as we should in honor of the federal government putting out a mass call to hire weather professionals at a premium after Elon fired everyone with no plan — is this an “eye” or the “calm before the storm”? The latter at least conveys that there’s no way of knowing when this is going to end.
Or the rabid opossum thing.
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter or Bluesky if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
