Law firms experience downturn in profits in first half of 2022, new survey says
Law firms are experiencing new challenges in 2022 as their profits decreased and expenses increased, according to new data from Wells Fargo’s Legal Specialty Group.
Wells Fargo, which surveyed 120 large, midsize and regional firms about the first half of the year, showed that while firms increased their head count by more than 5% to address a growth in transactional work in 2021, the hours that their attorneys worked have since decreased nearly 5%.
Joe Mendola, senior director of sales for Wells Fargo’s Legal Specialty Group, told Reuters, which reported on the survey results Tuesday, that this is a shift from last year, when law firms needed more attorneys to assist with increasing demands from clients.
“Fast-forward a year later, and demand has slowed quite a bit,” Mendola told Reuters. “As a result, productivity is down. Over the long term, if that decline becomes protracted, it’s something BigLaw will have to address.”
Wells Fargo also highlighted an increase of nearly 17% in lawyer compensation costs and an increase of more than 14% in general expenses over the past year, according to Reuters.
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