Law firms have had a good year, at least through the halfway point. Both demand and billing rates are up (Citi's Law Firm Group Report, noting 4.2% demand growth in H1 2026; Wells Fargo's Legal Specialty Group Six-Month 2026 Survey, finding double-digit standard-rate increases and 4.8% demand growth). The key question now is whether firms can collect in Q4. In a recent interview, Owen Burman of Wells Fargo Legal Specialty Group noted "inventory [WIP and A/R] was up to a little more than 17.7% across the Am Law 200" (The Collections 'Tug-of-War': Law Firms Will Be On-Edge Through Year's End, Andrew Maloney, Law.com, 10/20/26). Last year, AmLaw 50 firms collected 17.6% of their revenue in December. Burman expects collections to run late again this year, as the September interest rate hikes delay deal closings and drive up borrowing costs for clients. According to Burman, Q4 collections will determine whether firms have a "good" year or a "great" one.
Hungry for Growth
Law firms remain hungry for growth. Lateral partner activity has not slowed this year, even coming off record highs in 2025. In fact, lateral partner movement in the AmLaw 200 is up 5.5% over 2025 (using Firm Prospects data through 10/28). Historically, lateral partner candidates and their suitors have eyed a post-Jan. 1 start, after the candidate collects their bonus or year-end distribution from their current firm; increasingly, firms are expressing a willingness to compensate lateral candidates for leaving before the end of the year, by making them whole or partly whole (As Lateral Hiring Continues Into Q4, More Law Firms Are Willing to Shell Out to Make Candidates Whole, Amanda O'Brien, Law.com, 10/19/26). Such payments are particularly remarkable when you consider that the costs of the hire get booked in 2026, while any revenue from a Q4 lateral will not be realized until 2027 due to ramp-up and the lag in collections. In leaner times, or in a less frothy lateral market, firms would likely have opted to avoid the hit to this year's PEP total.
Firms of all sizes have their eyes on mergers to achieve greater scale more quickly; however, the number of completed mergers so far this year trails the pace of the first three quarters of 2025 (Law Firms Are More Eager Than Ever for Mergers, Yet Sealing the Deal Hasn't Gotten Easier, Amanda O'Brien, Law.com, 10/5/26).
Partnership Track
The median partnership track in the AmLaw 100 is now 12 years, according to data published by Pirical (The AM Law 100 Partnership Track Ranked, Lakshana Susinthiran, 9/26/26, based on promotions in the last 36 months). When I began recruiting in 2008, the trend was closer to 8 years. Associate pay has risen over the same stretch, but unevenly: first-year base salaries have risen from $160K to $235K (up 47%), while eighth-year salaries have risen from $280K to $455K (up 63%). Over that time, consumer prices rose 56.5% (U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers, 2008 annual average to Sept. 2026). The top of the scale has outpaced inflation; the bottom hasn't.
The published scale still tops out at year eight, about four years before the typical promotion. At most firms, that promotion is now to income partner, so the road to equity runs longer still.
P.S. In this heated lateral market, many partners are weighing whether to engage in a lateral process, and how to handle the LPQ if they do. I recently released a short video series on the lateral process from the partner’s side, from the questions worth sitting with before you ever take a call to how to make the lateral partner questionnaire work for you instead of against you. Watch the series here.
