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US law firms saw demand surge in third quarter - report

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  Published in Business and Finance on Monday, November 10th 2025 at 7:57 GMT by reuters.com
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U.S. Law Firms Report a Surge in Demand in the Third Quarter of 2025

A recent survey released by Thomson Reuters shows that U.S. law firms experienced a notable uptick in client demand during the third quarter of 2025. The report, which draws on data from 200 leading law firms across the country, highlights a 6.3 % increase in legal work volume compared with the second quarter, and a corresponding rise in revenue for many firms. The findings come at a time when the legal industry is navigating a rapidly changing landscape of client expectations, technological disruption, and evolving regulatory pressures.

Key Findings from the Thomson Reuters Survey

• Revenue Growth: 68 % of surveyed firms reported higher quarterly revenue than the previous quarter. Large firms (with >400 attorneys) posted an average 7.8 % increase, midsize firms (100‑400 attorneys) saw 5.4 %, and boutique practices (under 100 attorneys) experienced 4.1 % growth.
• Practice Area Drivers: The largest contributors to the surge were corporate litigation, regulatory compliance, and intellectual property (IP) litigation. Corporate deals, especially mergers and acquisitions (M&A), accounted for 22 % of the new work, while regulatory compliance—including data‑privacy, cybersecurity, and ESG‑related matters—rose by 19 %.
• Client Spending: On average, clients increased their legal spend by 4.7 % in the quarter. The uptick was most pronounced in the technology and finance sectors, where firms reported a 12 % rise in billing rates for specialist IP work.
• Geographic Trends: New York, Washington D.C., and California remained the primary hubs of activity, but firms in the Midwest and South also reported growth, reflecting a broader geographic spread of legal demand.

Thomson Reuters notes that the surge is “consistent with the broader economic recovery and the continued complexity of regulatory frameworks that compel companies to seek legal counsel.” The report also underscores that the legal industry’s resilience is tied to its capacity to adapt to new technology and changing client needs.

Linking to the American Bar Association’s Outlook

The Thomson Reuters survey draws a parallel to the American Bar Association (ABA) Legal Industry Outlook, which was released earlier in the year. The ABA’s 2026 outlook projects a sustained growth of 3.2 % in overall legal services demand, driven largely by an increase in regulatory complexity and the rising importance of technology-related disputes. The ABA also anticipates that “law firms will continue to invest in technology platforms that enable remote collaboration and data analytics,” a trend corroborated by the increased billing for cyber‑security and ESG matters noted in the Thomson Reuters report.

Insights from the LexisNexis “Legal Trends 2025” Report

Another linked source is LexisNexis’s “Legal Trends 2025” white paper, which examines the impact of emerging technologies on legal work. According to LexisNexis, the adoption of artificial intelligence (AI) for contract analysis and legal research has cut average transaction times by 18 %. Firms that integrated AI tools reported higher client satisfaction scores, which in turn contributed to the demand spike noted in the Thomson Reuters data. LexisNexis also points out that firms that have not yet embraced these technologies risk losing market share to competitors that can deliver faster, more cost‑effective services.

The Cost of Growth: Overhead and Talent Pressures

While demand is on the rise, many law firms are contending with rising overhead costs. A Reuters piece linked within the Thomson Reuters report notes that salary and benefits for senior attorneys increased by an average of 4 % year‑over‑year, while the cost of maintaining secure data infrastructures grew by 7 %. Additionally, the legal talent market remains tight, with many firms reporting difficulty filling roles in specialized practice areas such as data‑privacy and ESG compliance. These cost pressures have led some firms to explore alternative fee arrangements, including flat‑rate and subscription models, to maintain profitability.

Industry Response: Investing in Technology and Talent

In response to both the surge in demand and the cost challenges, several leading firms have announced strategic initiatives:

• Tech‑First Law Firms: A group of boutique firms specializing in cybersecurity and data‑privacy have expanded their in‑house AI teams, allowing them to offer predictive analytics services to clients.
• Virtual Collaboration Platforms: Large firms in New York and D.C. have rolled out secure cloud‑based collaboration tools that enable attorneys to work from anywhere while maintaining compliance with strict data‑security regulations.
• Talent Development Programs: Several firms have launched accelerated training programs for junior associates focused on emerging practice areas, ensuring a pipeline of expertise to meet client needs.

Looking Ahead

The Thomson Reuters report paints a cautiously optimistic picture for the U.S. legal sector. The third‑quarter surge in demand reflects both the enduring necessity of legal counsel in a complex business environment and the law firms’ evolving ability to deliver specialized services efficiently. However, the same report warns that firms must manage rising overhead and talent shortages if they are to sustain growth.

The linked ABA and LexisNexis reports reinforce the notion that technology adoption and regulatory compliance expertise will be key differentiators in the coming years. Firms that invest in AI tools, secure virtual platforms, and specialized talent development are likely to thrive as demand for high‑value, tech‑enabled legal services continues to climb.

In summary, the data suggests that while U.S. law firms are riding a wave of increased demand, they are also navigating a landscape that demands continuous innovation and cost‑management. As the industry adapts, the next few quarters will reveal whether the surge in demand translates into lasting growth and higher profitability for firms willing to invest in the tools and talent needed to meet modern client expectations.