2023 Bright Insight: The 2023 National Legal Sector Benchmark Survey Results

Some of the top-line trends we’ve uncovered and elaborate on within this report, include:

• Law firm revenue growth in 2022, which is moderating, is expected to remain above long-term historical averages following fleetingly high growth seen in 2021. Large firm optimism toward growth is high as surveyed Am Law 100 firms are forecasting double-digit revenue growth in 2023. • Demand for top legal talent is always competitive— 87% of firms surveyed are expecting attorney headcount to grow in 2023 . It’s not just attorneys in demand—two-thirds of firms are looking to increase professional staff headcounts as well. This would contradict the broader economy’s likely path of job losses in the second half of 2023, but certain portions of the legal sector are recession resilient or even counter-cyclical in nature. • Business competition hasn’t changed much; firms are still focused on fee structures and retaining their top talent. Labor costs, however, have declined in importance in 2023 due to strong fee growth seen in 2021. Tightness in legal sector employment is expected to persist despite a potential slowdown in general labor markets and the overall economy.

• While the overall office real estate market has been weak, demand from legal services occupiers has been incredibly strong with legal sector leasing at its highest recorded level in 2022 . On average, firms have been opting for floorplans that favor efficiency, driving down attorney per square foot averages across their portfolios. • Pre-pandemic law firms were likely to look around for precedent on how to structure their office space, but since 2020, everyone has been trying to figure out what works best for their firm. Workplace strategies in many law firms have been shifting; flexibility, balance, pandemic are gaining relative normalcy . Space reduction and cost management remain important factors to many firms but aren’t the end-all-be-all strategy. Firms are improving efficiency as evidence shows that more work can be done with less space than in the past, but workplace layouts and technology must support productivity, collaboration, connectivity, and mentorship. space efficiency, and attorneys/staff that work remotely more than pre

• Technology has been important to most firms for some time but the related tech investment costs have been and are expected to continue increasing. The three technology areas that firms are most interested in are IT security, artificial intelligence, and knowledge management . • Diversity, equity and inclusion (DEI) in the legal sector, which has improved, still has ample opportunity to increase its efforts. Global 100 and Am Law 200 firms appear to be more DEI conscious than smaller firms and 78% of firms surveyed this year have mandates in place to further improve diversity within the next five years. • Overall, the legal industry’s continued evolution is going to be varied but commonly driven by business model shifts, the expectations of attorney talent, developments in technology, and client demands. One thing that isn’t expected to change much is partnership structure with 90% of respondents indicating no significant change in that area.


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