Law Firms Push Innovation and Demonstrate Resilience Amid Market Challenges

TORONTO, Feb. 10, 2025 – Thomson Reuters (TSX/NYSE: TRI), a global content and technology company, issued a new report today that showed law firms finished 2024 incredibly well. The average law firm saw profit growth in the double digits for the year and 11.5% in Q4, according to the Q4 2024 Thomson Reuters Law Firm Financial Index (LFFI), powered by Financial Insights.

Transactional practices experienced growth in Q4 led by corporates (4.0%) and real estate (3.0%). Counter-cyclical practices slowed following two years of record growth, counterbalancing the increase in transactional work. In combination, trends suggest the overall demand environment is expected to be more static in the first half of 2025 than it was in 2024.

Overall demand for Q4 2024 sill grew by 3.3% compared to Q4 2023, but at a slower pace than Q3 2024, while law firms’ expenses surged in the fourth quarter. Law firms invested across multiple categories, focusing significant resources on technology and knowledge management, seeing their overhead expenses rise 6.9%. Direct expenses were up 6.2% as firms paid out sizeable bonuses to their associates and staff.

“Law firms continue to successfully navigate the dynamic landscape and demonstrate their commitment to serve their clients at the highest level by investing significantly in technology, including generative AI, and the upskilling of their people,” said Raghu Ramanathan, president of Legal Professionals, Thomson Reuters. “Law firms enter 2025 from a position of strength and appear ready to drive profitability. As the AI market matures, law firms can enhance job satisfaction, well-being, and work-life balance by using AI for routine tasks, freeing up time to focus on their clients’ complex needs and driving sustainable productivity growth.”

A copy of the Q4 2024 LFFI report can be downloaded here.

The LFFI, produced by the Thomson Reuters Institute, is a composite index of law firm market performance using Financial Insights data drawn from major law firms in the United States and key international markets.

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