USA/Canada News
Thomson Reuters, a global content and technology company, and the Center on Ethics and the Legal Profession at Georgetown Law today released the 2025 Report on the State of the US Legal Market. The report notes a transformative shift in the legal profession amid the evolution from traditional practices to innovative business models.
Law firms will need to continue innovating and adapting to remain competitive, including implementing the latest technology, employing new business models and prioritizing client-centric practices.
The report encourages law firm leaders to “take advantage of the benefits of a lucrative 2024,” noting that firms’ strong performance was defined by three metrics: demand, rates and expenses. Solid demand growth – across counter-cyclical and transactional practices – coupled with law firm billing rates accelerating at their fastest pace since the Great Financial Crisis contributed to law firms’ soaring profits, alongside expense growth levelling off.
“There has been an undeniable impact of generative AI on the legal market, and it has the potential to continue driving robust growth by enabling lawyers to be more efficient and productive, while boosting law firm profitability,” said Raghu Ramanathan, president, Legal Professionals, Thomson Reuters. “We’ll continue to see this effect as more firms invest in new technologies and implement AI and generative AI solutions, streamlining their workflows and improving the quality of their work. Our expectations are based on conversations with our customers as well as data in the Future of Professionals report, which showed that AI is a top strategic priority for the legal profession and is set to save professionals 12 hours per week by 2029.”
In 2025, the impact of generative AI will continue to loom large, driving shifting market factors:
The report also states that firms will likely see demand weaken in 2025, compared to 2024, due to both the historic difficulty of achieving long-run demand growth plus uncertain conditions in the U.S. and global economies. However, the report notes that results of the U.S. presidential election could boost demand as greater levels of economic and geopolitical instability generally see clients turn to their lawyers to mitigate risk. In addition, the 2025 outlook includes expense growth remaining at elevated levels, putting more pressure on profits.
The more successful firms will be those that demonstrate agility and innovation, adapting their business models, and implementing and adopting new technologies to not only survive but thrive amid changing market demands and clients’ needs.
The report concludes that while firms took steps in 2024 to ensure sustainable growth in a changing market, 2025 will require firms to continue adapting to the transformative impact of generative AI and emerging technologies. Innovative firms that invest in technologies and implement strategies to update their business model – including how they measure and reward lawyer performance – will be best positioned to achieve ongoing success.
Ramanathan added, “Agility and innovation will be the hallmarks of the firms that make the most of this moment as technology advancements transform the fundamentals of the market, shaping how legal services are delivered and the traditional practice of law.”
Download the 2025 Report on the State of the US Legal Market here.
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