This report shows that the overall demand for legal services fell 0.7% in Q3 of this year compared to the same time in 2021. The only practice area to see an increase in demand was labour and employment, which rose 0.3%. M&A advice fell by 13.7%.
Thomson Reuters attributed the drop in demand to both a decrease in transactional work compared with the previous year as well as an increase in lawyers’ salaries due to the escalating battle for top talent. In addition, the report noted that staff returning to their physical offices after the pandemic would have added expenses.
The growth in overhead and direct expenses for firms was 10.8% and 12.8%, respectively. According to the report, most law firms responded to rising costs by continuing with seasonal hiring and waiting.
The report said that law firms were willing to accept a short-term productivity decline because of their recent memories of the difficulties of hiring talent.