Like America’s middle class, midsize law firms are struggling as BigLaw takes a bigger bite of the legal market.
A new report from Thomson Reuters shows that the largest firms are separating themselves from smaller firms in the demand for legal services. Michael Abbott, vice president of client management and global thought leadership at the company, says it reverses a trend a few years ago that showed clients moving work to smaller, less expensive firms.
“While the overall market continues to struggle to find traction this year, we are seeing signs of improved strength across ‘Big Law,'” Abbott said. “The market tier made up of the largest firms is showing more widespread stability and growth than their smaller counterparts.”
Decline in Demand
Demand for legal services slipped 0.1 percent across all firms for the same quarter last year, according to the report. But the gap in demand between the top 100 firms and the next 100 firms was 1.7 percent, with demand at the second hundred falling 0.6 percent.
American Lawyer, which ranks the large and midsize firms by gross revenues, reported earlier that the Am Law 200 under-performed last year. The magazine described the second hundred in general as “flat-lining.”
Litigation work has fallen off at large and midsize firms. Real estate also declined. Corporate practice was flat, except for mergers and acquisitions and tax work, Thomson Reuters reported.
The Am Law 100 were the only firms with positive growth through the first six months of the year. “We are now seeing a greater flow of ‘big ticket’ work such as litigation and M&A to the ranks of the largest national and global firms,” Abbott said.
Both the large and midsize firms reported productivity problems, with numbers falling for different reasons. The top firms added staff; the second hundred cut jobs. Productivity declined at both, but demand was up at the top firms.
Midsize firms suffered the most in the diminishing demand, dropping 2.9 percent in productivity while also shedding workers.