In the fast-evolving realm of law, 2024 promises a strategic shift for major law firms. A comprehensive report released today by Citigroup’s Citi Global Wealth at Work Law Firm Group and Hildebrandt Consulting foresees a dynamic landscape, highlighting ambitious plans for the expansion of bankruptcy and litigation teams. However, the journey ahead is riddled with challenges, ranging from talent acquisition hurdles to the intricate dance with generative artificial intelligence.
Unlike the modest growth witnessed in 2023, analysts anticipate a more robust year for law firms in 2024. The report reveals a 4.8% average revenue increase for firms in the first three quarters of 2023, accompanied by a marginal 0.7% decline in client demand. Intriguingly, the top 50 highest-grossing firms in the United States experienced a 1.2% average decrease in demand, attributed to their heavy reliance on substantial mergers, acquisitions, and capital market transactions.
Striking a balance between growth and productivity, these top firms reported a 3.3% growth in total lawyer headcount and a 3.6% dip in productivity. Yet, the overall revenue growth of 5.2% outpaced the 4.9% increase in expenses, hinting at a potential year-end surge in revenue.
The spotlight in 2024 is on law firms prioritizing specific sectors, such as litigation, investigations, bankruptcy, and funds and investment management. Gretta Rusanow, head of advisory services for Citi’s law firm group, emphasizes the importance of a strategic practice mix, noting that firms focused on transactional work faced a more challenging year.
Looking ahead, the report projects a continuation of the trend seen in 2023, with an increase in both equity and non-equity or income partners. The research indicates that 60% of large firms expanded their equity partner ranks from 2017-2022, with an overwhelming 79% anticipating further growth in equity partnerships by 2025.
While macroeconomic and geopolitical challenges loom large, the report remains optimistic about the resurgence of transactional practices in 2024, anticipating a rebound following the global M&A slowdown. Firms are strategically positioning themselves for growth in key areas, including bankruptcy, litigation, private equity, digital and cyber, and private capital.
A noteworthy aspect highlighted in the report is the legal industry’s vigilance towards generative artificial intelligence. Though its impact on law firms has been limited thus far, firms are attuned to its potential implications for the partnership-staff ratio and the broader dynamics within legal teams. Legal research, evidence analysis, and drafting legal documents emerge as focal points for AI companies, with new products and substantial investments shaping the evolving landscape.
In a rapidly transforming legal world, 2024 beckons law firms to navigate challenges and seize opportunities, crafting a strategic path forward in the dynamic intersection of law and technology.
