The business of law is booming—at least on the surface. Fresh numbers reveal that America’s largest law firms are raking in double-digit revenue growth this year, powered by aggressive billing rate hikes. But behind the glossy financials lurks a balancing act: the cost of keeping both highly paid lawyers and cutting-edge artificial intelligence tools humming at the same time.
Billing rates at top firms jumped an average of 9.2% in the first half of 2025, helping revenues climb more than 11% and profits per equity partner soar nearly 14%. Some elite partners now command over $3,000 an hour, with Milbank’s Neal Katyal pushing that figure to $3,250—numbers that would make even Wall Street bankers blush.
Yet the revenue surge is doing little more than chasing spiraling costs. Law firm overhead excluding lawyer pay climbed nearly 9% this year, fueled largely by investments in AI and other technology. For now, firms are stuck paying for both—the armies of associates and the algorithms meant to replace them. As one consultant put it: “Right now, you’ve got both the humans and the machines, and no savings in sight—just more expenses.”
Compensation, office leases, professional liability insurance—all of it is climbing. “Expenses are up across the board,” another industry analyst warned. AI, meanwhile, looms as a wild card. If software can draft a polished 15-page motion in minutes, does the billable hour model even survive? Some argue firms may be pushed toward project-based fees, though skeptics point out similar predictions accompanied past tech revolutions like computerized legal research and e-discovery.
Meanwhile, the pipeline of human talent isn’t slowing. Law school applications jumped 18% this year, and the most recent graduating class posted a record 93% employment rate within 10 months. For now, the next generation of lawyers is still finding plenty of jobs, even as AI’s shadow stretches further across the profession.
Beyond the balance sheets, major cases and courtroom dramas keep the spotlight on Big Law. Epic Games is pressing for more than $205 million in legal fees after defeating Google in a landmark antitrust battle. A Philadelphia law firm that dissolved last year is facing lawsuits over unpaid rent and pension fund disputes. And a nominee for Air Force general counsel revealed earning over $1 million in pay and bonuses while representing corporate giants from Amazon to Boeing.
The story of modern law firms is, in essence, the story of contradictions: soaring revenues paired with ballooning costs, human lawyers training machines that may one day replace them, and a business model clinging to the billable hour even as technology threatens to make that metric obsolete.
For now, firms are enjoying the ride. But the question lingers—who will win when the machines are finally ready to take the wheel?
