US law firms grew revenue by 11.4% on average in the first half of the year according to a report by Wells Fargo Legal Speciality Group, amid growing evidence that 2024 could be a historically strong year for the industry. 

The increase, driven by billings rates and demand growth, is more than double the 4.4% revenue growth reported for the same period last year and is among the best first halves Wells Fargo has surveyed, second only to 2021. 

Firms “experienced very strong performance, partly benefiting from a relatively easy comparison against a soft first half of 2023,” the report found. 

More than 130 firms participated in the research, including 66 American Lawyer (Am Law) 100 firms and 42 Am Law second hundred firms. 

Capital markets and merger activity recovered, the bank said, while practices that fuelled growth in 2023 such as litigation, restructuring, regulatory/antitrust and investment management continued apace.

Revenue growth was strongest for the largest firms, up 13.8% for the Am Law 1-50, while firms in the Am Law second fifty and Am Law second hundred trailed, albeit with “admirable” growth of 7% and 8.8% growth respectively.

Rate growth continued to be the primary contributor to that growth, with average standard rates rising 8.8% year-over-year, up from the 7.7% increase reported in the first half of 2023. Again top 50 firms outpaced their lower-grossing rivals by this metric, reporting 10% standard rate growth compared to 7% for both the second fifty and the second hundred.

The top 50 firms pulling away from the rest of the pack is underscored by their gains in profit per equity partner, which increased by 25.9% compared to 7.9% for the second fifty and 13.9% for the second hundred. Likewise, net income growth ranged from a high of 26.8% for the Am Law 1-50 to a low of 8.4% for the second fifty; the second hundred’s 15.2% growth partly reflected an easier comparison of -7.9% in the prior year period. However, the report cautioned that percentage increases in net income “can be unusually large for interim reporting, given seasonality of collections and cash basis reporting”. 

Demand growth of 3.1% was similar across size tiers, the report found, and represented an acceleration from the 2% experienced in the first quarter of 2024. Overall, productivity improved 1.5% to 1,576 hours per lawyer, with most of the improvement occurring among the largest firms.

Inventory grew 12.8%, with growth similar across tiers, the report found. As a result, inventory turnover slowed by more than two days, with wide variation among size tiers. The largest firms collected bills one day faster than this time last year, while the other tiers experienced a slowdown ranging from three to eight days.

Meantime expenses rose 7% on average in the first half, with overhead costs rising slightly faster (7.3%) than lawyer costs (6.7%). 

The report’s findings tally with data released earlier this month by Citigroup’s Global Wealth at Work Law Firm Group, which found 11.4% revenue growth and 2.9% demand growth for the first half of the year among the 192 US law firms it surveyed, including 81 of the top 100 by revenue.  

Meanwhile, with the majority of top 50 UK law firm results now in, a similar picture of strong growth – but not as strong – emerges for these practices, whose financial years typically run to 30 April. The Law Society Gazette’s financial results tracker shows revenue for the group up by an average of 10% with net profit up by 16%.