Demand, as measured by hours worked, was up 2.9% for law firms in Q1 2026 over Q1 2025 (Law Firm Financial Index ("LFFI Report"), Thomson Reuters, 5/13/26, which tracks financial data from 171 U.S. firms across the Am Law 100, Second Hundred, and Midsize segments; see also Strong Transactional Performance Drove Increased Q1 Demand, but Expenses Rose Too, Jon Campisi, Law.com, 5/12/26 (noting "above-average demand growth" in Q1, according to Citi Law Firm Group).
M&A led the way at 4.4% demand growth; all other practices showed growth, except for IP which was flat.
Rates Rise
Impressively, worked rates were up 7% overall in Q1 2026 over Q1 2025; however, rate growth was not uniform across segments. The AmLaw 100 averaged 9.8% worked rate growth. Midsize firms saw a slight contraction in rate growth to 5.3%, down from the 6% rate growth they experienced throughout 2025. Although the contraction was small, it is still notable because it is the first time any segment has seen rate growth decelerate since 2021. The Second Hundred held steady relative to 2025 at 7% rate growth.
Leaving Money on the Table
The LFFI Report characterized the tempered rate growth of Midsize Firms as a deliberate, but ineffective strategy to capture market share (LFFI Report, noting that Midsize Firms are seeing less demand growth than the AmLaw 200). The Report theorizes that cost-conscious legal departments are skipping Midsize Firms altogether on the way down the pricing ladder, and that Midsize Firms' more modest rate increases are not only failing to increase demand, but are causing Midsize Firms to leave money on the table.
