US Law Firms on Track for Profit Boost as Demand and Billing Rates Rise

US law firms enjoyed a strong second quarter, driven by rising demand for legal services and higher billing rates, according to new financial data.

Demand, measured by the number of hours lawyers worked, rose 3% in the second quarter of 2026, while billing rates increased by more than 7%, according to the latest Law Firm Financial Index from the Thomson Reuters Institute, released on Monday.

If demand growth is sustained through the rest of the year, law firms could have their busiest year since 2021, when they were flooded with work delayed by the COVID-19 pandemic in 2020, the index found. The latest surge in demand builds on strong and profitable years in 2024 and 2025.

“Measured against two already powerful years rather than a recovery, this is as close to strong as legal demand gets,” the latest index report said.

Real estate practices recorded the strongest demand growth in the second quarter at 3.6%, followed by corporate work at 3.5% and labour and employment at 3.4%. Litigation demand rose 3%, while intellectual property demand increased 2.8%.

However, demand growth was not evenly distributed across law firms’ ranks. Demand for work performed by associates rose 4.3% in the second quarter, while non-equity partners saw a 6% increase, according to the index. By contrast, demand among equity partners fell 1.2% year-on-year.

“This is not a sign equity partners are becoming unnecessary — someone still has to steer — but it does say something about where the additional workload is actually going,” the report said.

The index compiles quarterly financial data from 195 large and mid-sized US law firms, covering key measures including demand, productivity, billing rates and expenses.

Billing rates increased 7.1% compared with the second quarter of 2025, continuing an upward trend that began in 2021. Such growth would have been “almost unthinkable” before the sustained billing rate increases of recent years, the report’s authors said.

However, law firms also faced rising costs in the second quarter of 2026. Direct expenses increased 8.3% year-on-year, while overhead costs rose 7.7%. Technology spending was among the fastest-growing expenses, increasing 11.6% from a year earlier.

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