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

Firms Outside of Am Law 200 Expect Positive Revenue Growth (5.7%), But at Rate Below 2022

Although the legal sector experienced a significant demand boom in 2021, the trajectory, while remaining positive, has downshifted over the past five quarters. To this end, revenue has moderated, increasing a “modest” 4.1% in the first nine months of 2022. 1 Among Am Law 100 firms, gross revenue for 2022 was up 2.7%, but average revenue per lawyer (-1.9%) and average profits per equity partner (-3.7%) were both down year-over-year (YoY). 2 Revenue at nearly 60% of the Am Law 100 firms declined YoY in 2022. 3 Declining demand for legal services in the second half of 2022 was largely due to a fall off in transactional work. 4 In addition, rising interest rates and expectations of a slowing economy reduced mergers and acquisitions, as well as corporate finance and real estate legal sector activity. Compared to the legal sector average, respondents to the 2023 Bright Insight Benchmark Survey reported better revenue

growth for full-year 2022, which may be due to the fact that survey respondents are more likely to be larger and more prestigious firms. While the average revenue change in 2022 was +8.7%, Am Law 100 firms fared significantly better at +11.6% . The rich have been getting richer as larger firms have been better equipped to grow revenue both organically and through acquisition. Mergers and acquisitions were elevated in Q1 2023 compared to a year ago and skew towards larger firms, 5 and this will continue to drive revenue growth for them. Firms with over 500 attorneys are forecasting that revenue growth in 2023 will be higher than it was in 2022. And smaller firms still expect to see positive revenue growth in 2023, but at a slower rate than last year. Similarly, Global 100 and Am Law 200 firms are expecting stronger results in 2023 than 2022, while the opposite is true for firms outside of the Am Law 200. Concerns related to the economy have impacted employment and there have been several firms that have made public

2022 YoY 2023 YoY

13.0%

11.4%

11.7%

11.6%

8.8%

7.9%

8.7%

6.4%

7.6%

7.2%

5.9%

5.7%

Global 100

Am Law 1 - 50

Am Law 51 - 100

Am Law 200

None of the above

All Firms

Source: Cushman & Wakefield Research

1 2023 Client Advisory law firm report by Citi Private Bank and Hildebrandt Consulting 2 Law.com (via https://abovethelaw.com/2023/04/the-am-law-100-biglaw-gets-bucked-off-at-rough-revenue-rodeo/) 3 According to analysis by Above the Law 4 2023 Report on the State of the Legal Market by Thomson Reuters 5 Fairfax Associates and Thomson Reuters

Revenue has moderated, increasing a “modest” 4.1% in the first nine months of 2022.

6 | BRIGHT INSIGHT