New dynamics, high expectations
After 18 months of managing profit through uncertain times, the days of low revenues are coming to an end. Demand for legal services in the third quarter of 2021 was 4.4% greater than the same period last year, following second-quarter year-over-year demand growth of 7.3%, according to Thomson Reuters. Additionally, RSM’s Middle Market Index reached an all-time high of 145.5 in the third quarter, showing that middle market business conditions point to continued robust economic growth, rising revenues and net earnings.
There’s no guarantee that strong demand and rate increases will result in another year of record profits for law firms. A return to normal also means a return of costs.
Prioritizing improvements over expansion
Although demand and optimism are increasing, a recent Thomson Reuters survey indicated law firm executives intend to prioritize higher margins on existing work over investing in aggressive expansion tactics in the near future. In the two charts immediately below, you can see the notable focus on various performance improvement strategies within existing client operations.

