U.S. law firms enjoyed a strong second quarter thanks to increases in demand for their services and their billing rates, new financial figures show.
Demand, measured in the number of hours lawyers worked, rose 3% over the second quarter of 2026 while billing rates increased more than 7% during that time, according to the Thomson Reuters Institute’s latest Law Firm Financial Index, released Monday. The Thomson Reuters Institute and Reuters share the same parent company.
Law firms will have their busiest year since 2021 — when they were flooded with work delayed by the COVID-19 pandemic in 2020 — if the demand growth is sustained through the remainder of the year, the index found. Last quarter’s demand spike builds upon both 2024 and 2025, which were also busy and profitable for firms.
“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 saw the largest demand growth in the second quarter at 3.6%, followed by corporate work at 3.5% and labor and employment at 3.4%. Litigation demand rose 3%, while intellectual property demand increased 2.8%.
But demand growth was not spread evenly across the law firms' ranks, the index found. 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 declined 1.2% year-over-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 index report said.
The index compiles quarterly financial metrics from 195 large and mid-sized U.S. law firms on key factors such as demand, productivity, billing rates and expenses.
Billing rates increased 7.1% over the second quarter of 2025, continuing an upward trend that began in 2021, the report said. That level of growth would have been “almost unthinkable” prior to the steady billing rate increases of recent years, the authors wrote.
But law firms’ costs also climbed in the second quarter of 2026, with direct expenses up 8.3% over the previous year and overhead expenses up 7.7%. Technology spending was among the fastest growing costs, up 11.6% year-over-year, according to the index.
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Rising US law firm expenses offset strong demand and rate hikes in first quarter - report
