Legal Service Demand Drops as Office Expenses Soar
Sector continues to raise fees, collect bills with “no end in sight.”
Demand for law firm services fell in 2022 by 0.1%.
Meanwhile office expenses soared by more than 30%, year-over-year, putting legal teams on the watch in 2023, including as it relates to office space, according to the Thomson Reuters Institute 2023 Report on the State of the Legal Market.
“That result stood in stark contrast to the 3.7% growth rate recorded for all of 2021, which admittedly was bolstered by the dip in 2020,” according to the report.
“The collapse in demand growth was driven primarily by a sharp contraction in transactional work that resulted from growing economic uncertainty and fell particularly heavily on larger firms.”
Thomson Reuters’ report found that the demand downturn was caused in part by clients choosing to either increase in-house counsel or decrease their outside counsel spending on a quarter-by-quarter basis, signaling another potentially negative impact.
Nonetheless, firms increased their rates, and bills were collected throughout the year, according to the report. However, the report finds that the rapid rate at which expenses overall were rising will continue “with no obvious end in sight.”