2025 Citi Hildebrandt Client Advisory reports significant law firm industry revenue growth was driven by increasing demand.
Demand was pivotal to growth in 2024, ignited by a diverse range of law firm practices including “litigation, regulatory, bankruptcy.” Optimism will continue as a key theme in 2025, driven by “positive momentum across M&A, corporate and transactional work.”
Citi Wealth and Hildebrandt Consulting have officially released their 2025 Citi Hildebrandt Client Advisory.
The Advisory covers the broad landscape for the legal industry, including ways law firms are responding to “market challenges and where they see the greatest opportunities for growth in the year ahead.”
As forecasted in last year’s Client Advisory, 2024 is “on track to be a stronger year than 2023.”
Early indications for the full-year data – based on the first nine months of 2024 – showcase strong activity levels with “revenue growth up 11.9% and a 3.2% rise in law firm industry demand.”
Inventory was up “12.6% at the end of September, driven by 14.2% growth in accounts receivable and 11.1% growth in unbilled time.”
Many law firms may have worked through the “aged inventory challenges they faced through 2023.”
As a result, firms have seen a rise in inventory and an “improvement in quality, placing them in a solid position for year-end collections.”
Based on the 2024 Citi Law Firm Leaders Survey, Citi Wealth expects to see ongoing investment in five major markets: New York, London, Washington D.C., Northern California and Texas, as well as “increased investment in Chicago, Miami and Boston.”
While 80% of large firms reported an increase in their associate headcount during 2018 to 2023, 71% of those firms “added income partners and counsel.”
Talent retention and managing the growth of income partners “within an active lateral market will continue to be important for firms.”
Insights also point to a shift in operational efficiency priorities, with technology investment and “improving collections and realization as the top focus areas for firms in the coming year.”
While the global geopolitical and macroeconomic environment remains volatile, Citi Wealth sees “positive signs for activity levels overall.”
Gretta Rusanow, Head of Advisory Services for the Law Firm Group at Citi Wealth said:
“With interest rates continuing to decline and the U.S. election now behind us, we anticipate a rebound in market activity with good reason to be optimistic for the law firm industry next year. Firms have experienced strong growth this year and see a clear, upward trajectory for 2025.”
Managing rapid Gen AI advancements will remain a strong focus for law firms, and cloud technology and cybersecurity will “become increasingly important priorities.”
In 2025, firms will be expected to gain a stronger understanding on how technology could “improve their ability to manage billing and collections.”
Brad Hildebrandt, Chairman of Hildebrandt Consulting said:
“The higher costs of running a law firm will require scale – and we expect to see more law firm M&A activity.”
Analyses and projections are based on data collected from a sampling of primarily US-headquartered law firms by the Law Firm Group, as well as conversations with law firm leaders.