Persistent rate growth fuelled a double-digit rise in revenue among the Am Law 200 in the first quarter, according to research by Wells Fargo & Co’s legal banking unit, although a dragging US deals market and economic uncertainty meant demand increase was well below what law firms expected just a few months ago. 

Revenue among the top 200 US law firms grew 11.3%, up from 9.5% this time last year, with acceleration occurring across all tiers. Growth was higher among the Am Law 100 (11.4%) than the Second Hundred firms (9.2%). 

Rate growth continued to be the primary contributor, with average standard rates rising 9.5% year-over-year, more than matching the 9.1% achieved in 2024. Like last year, standard rate growth was higher for the Am Law 50 (more than 10%) than for the other tiers (8.2% for the Second Fifty and 6.1% for the Second Hundred). 

“Law firms continued to see revenues increase in early 2025,” said Matt Anderson, head of Wells Fargo’s legal specialty group. “That’s certainly welcome news for firms, which saw that demand in the first quarter did not quite live up to expectations. Yet, early indications suggest that law firms remain cautiously optimistic for a successful 2025.” 

Demand, as measured by lawyer logged hours, rose by 1.7% in the first quarter, a showing Wells Fargo described as “decent historically” but a slowdown from the 2% gain in the same period last year and well below the 3.2% growth that firms forecasted for 2025 in the bank’s year-end survey conducted in January. 

Firms have upped their hiring this year, with lawyer headcount rising 3.4% compared to 0.9% in Q1 2024, anticipating that a strong deals market would drive the acceleration in demand seen last year, Owen Burman, a senior consultant in Wells Fargo’s legal banking group told Bloomberg Law.

That was “certainly on hold”, Burman said, though he added that firms didn’t seem to be “pulling down their expectations yet”.

The value of US M&A slipped 13% in the first quarter to $436.6bn even as global M&A jumped more than 12% to $984.4bn according to Dealogic data, as the global trade war kicked off by US president Donald Trump soured expectations for a bumper start to the year for Wall Street deals. 

Figures released on Wednesday (30 April) by the US Bureau of Economic Analysis showed the US economy contracted by 0.3% in the first quarter, fuelled by a drop in government spending and a surge in imports as businesses raced to get goods into the country before the tariffs introduced by Trump came into effect. 

Meantime, for the Am Law 100, inventory in the first quarter grew slightly faster than collections, resulting in little change in the collections cycle. However, for the Am Law Second Hundred, inventory growth was half as much as revenue growth, with the faster collections cycle contributing to that segment’s revenue growth in the first quarter.

Expenses rose at a fast pace, up 10%, above the 9% increase for all of 2024, and in line with the growth rate of revenue for all but the Second Hundred, which held expense growth to 5%. Wells Fargo said that growth in lawyer headcount “certainly contributed the lion’s share of the expense increase”, along with growth in professional staff, which increased at a faster rate (4.3%) than lawyer count.  

The report – The First Quarter 2025 – surveyed 67 Am Law 100 firms and 38 Am Law Second Hundred firms.