{"id":130199,"date":"2025-08-11T11:39:51","date_gmt":"2025-08-11T19:39:51","guid":{"rendered":"https:\/\/xira.com\/p\/2025\/08\/11\/second-quarter-delivered-eerie-calm-for-law-firms-waiting-for-tariff-economy-slump\/"},"modified":"2025-08-11T11:39:51","modified_gmt":"2025-08-11T19:39:51","slug":"second-quarter-delivered-eerie-calm-for-law-firms-waiting-for-tariff-economy-slump","status":"publish","type":"post","link":"https:\/\/xira.com\/p\/2025\/08\/11\/second-quarter-delivered-eerie-calm-for-law-firms-waiting-for-tariff-economy-slump\/","title":{"rendered":"Second Quarter Delivered Eerie Calm For Law Firms Waiting For Tariff Economy Slump"},"content":{"rendered":"

In its latest Law Firm Financial Index<\/a>, 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\u2019re halfway to the other side, and there\u2019s not much to suggest the looming danger will let up any time soon. There\u2019s an eerie calm before someone releases a family of rabid opossums in your house too, but it\u2019s a lot harder to soothe yourself knowing \u201cthis too shall pass\u201d in that scenario.<\/p>\n

For law firms, Q2 came and went without much drama. Demand was up \u2014 slightly \u2014 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: \u201cEverything\u2019s Fine, Which Is Exactly Why You Should Panic.\u201d<\/em> The report paints Q2 2025 as the legal market\u2019s equivalent of that awkward silence in a horror movie when the dog stops barking. <\/p>\n

Clients sought out more advice, but that\u2019s 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 \u201ccalm\u201d worries people.<\/p>\n

\"\"
<\/figcaption><\/figure>\n

Meanwhile the costs just keep adding up and, in true 2025 form, a large part of that is the AI arms race. <\/p>\n

Interestingly, after years of the Biglaw elite driving the business numbers for the industry, it\u2019s the midsized and Second Hundred firms enjoying a lot of the benefits from last quarter. <\/p>\n

\n

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\u2019 fees worked growth above that of the Am Law 100, offsetting Am Law 100 firms\u2019 advantage in worked rate growth.<\/p>\n<\/blockquote>\n

\"\"
<\/figcaption><\/figure>\n

If we must stick with the meteorological references \u2014 as we should in honor of the federal government putting out a mass call to hire weather professionals at a premium<\/a> after Elon fired everyone with no plan \u2014 is this an \u201ceye\u201d or the \u201ccalm before the storm\u201d? The latter at least conveys that there\u2019s no way of knowing when this is going to end. <\/p>\n

Or the rabid opossum thing.<\/p>\n

\n

\"Headshot\"Joe Patrice<\/a>\u00a0is a senior editor at Above the Law and co-host of Thinking Like A Lawyer<\/a>. Feel free to\u00a0email<\/a> any tips, questions, or comments. Follow him on\u00a0Twitter<\/a>\u00a0or Bluesky<\/a> if you\u2019re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search<\/a>.<\/em><\/strong><\/p>\n

The post Second Quarter Delivered Eerie Calm For Law Firms Waiting For Tariff Economy Slump<\/a> appeared first on Above the Law<\/a>.<\/p>\n

\"\"<\/figure>\n

In its latest Law Firm Financial Index<\/a>, 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\u2019re halfway to the other side, and there\u2019s not much to suggest the looming danger will let up any time soon. There\u2019s an eerie calm before someone releases a family of rabid opossums in your house too, but it\u2019s a lot harder to soothe yourself knowing \u201cthis too shall pass\u201d in that scenario.<\/p>\n

For law firms, Q2 came and went without much drama. Demand was up \u2014 slightly \u2014 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: \u201cEverything\u2019s Fine, Which Is Exactly Why You Should Panic.\u201d<\/em> The report paints Q2 2025 as the legal market\u2019s equivalent of that awkward silence in a horror movie when the dog stops barking. <\/p>\n

Clients sought out more advice, but that\u2019s 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 \u201ccalm\u201d worries people.<\/p>\n

\"\"
<\/figcaption><\/figure>\n

Meanwhile the costs just keep adding up and, in true 2025 form, a large part of that is the AI arms race. <\/p>\n

Interestingly, after years of the Biglaw elite driving the business numbers for the industry, it\u2019s the midsized and Second Hundred firms enjoying a lot of the benefits from last quarter. <\/p>\n

\n

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\u2019 fees worked growth above that of the Am Law 100, offsetting Am Law 100 firms\u2019 advantage in worked rate growth.<\/p>\n<\/blockquote>\n

\"\"
<\/figcaption><\/figure>\n

If we must stick with the meteorological references \u2014 as we should in honor of the federal government putting out a mass call to hire weather professionals at a premium<\/a> after Elon fired everyone with no plan \u2014 is this an \u201ceye\u201d or the \u201ccalm before the storm\u201d? The latter at least conveys that there\u2019s no way of knowing when this is going to end. <\/p>\n

Or the rabid opossum thing.<\/p>\n

\n

\"Headshot\"Joe Patrice<\/a>\u00a0is a senior editor at Above the Law and co-host of Thinking Like A Lawyer<\/a>. Feel free to\u00a0email<\/a> any tips, questions, or comments. Follow him on\u00a0Twitter<\/a>\u00a0or Bluesky<\/a> if you\u2019re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search<\/a>.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

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\u2019re halfway to the other side, and there\u2019s not much to suggest the looming danger will let up any time soon. There\u2019s an […]<\/p>\n","protected":false},"author":3,"featured_media":130160,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16],"tags":[],"class_list":["post-130199","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-above_the_law"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/xira.com\/p\/wp-content\/uploads\/2025\/08\/Headshot-300x200-uccgVI.jpg?fit=300%2C200&ssl=1","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/130199","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/comments?post=130199"}],"version-history":[{"count":0,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/130199\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media\/130160"}],"wp:attachment":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media?parent=130199"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/categories?post=130199"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/tags?post=130199"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}