2025 Citi Hildebrandt Client Advisory Reports Law Firm Industry Revenue Growth Driven by Increasing Demand
- Demand was pivotal to growth in 2024, ignited by a diverse range of law firm practices including litigation, regulatory, bankruptcy and more
- Optimism will continue as a key theme in 2025, driven by positive momentum across M&A, corporate and transactional work
Citi Wealth and Hildebrandt Consulting today released their 2025 Citi Hildebrandt Client Advisory. The Advisory covers the broad landscape for the legal industry, including ways law firms are responding to market challenges and where they see the greatest opportunities for growth in the year ahead.
As forecasted in last year's Client Advisory, 2024 is on track to be a stronger year than 2023. Early indications for the full-year data – based on the first nine months of 2024 – showcase strong activity levels with revenue growth up 11.9% and a 3.2% rise in law firm industry demand.
Inventory was up 12.6% at the end of September, driven by 14.2% growth in accounts receivable and 11.1% growth in unbilled time. Many law firms may have worked through the aged inventory challenges they faced through 2023. As a result, firms have seen a rise in inventory and an improvement in quality, placing them in a solid position for year-end collections.
Based on the 2024 Citi Law Firm Leaders Survey, Citi Wealth expects to see ongoing investment in five major markets: New York, London, Washington D.C., Northern California and Texas, as well as increased investment in Chicago, Miami and Boston. While 80% of large firms reported an increase in their associate headcount during 2018 to 2023, 71% of those firms added income partners and counsel. Talent retention and managing the growth of income partners within an active lateral market will continue to be important for firms.
Insights also point to a shift in operational efficiency priorities, with technology investment and improving collections and realization as the top focus areas for firms in the coming year. While the global geopolitical and macroeconomic environment remains volatile, Citi Wealth sees positive signs for activity levels overall.
"With interest rates continuing to decline and the U.S. election now behind us, we anticipate a rebound in market activity with good reason to be optimistic for the law firm industry next year," said Gretta Rusanow, Head of Advisory Services for the Law Firm Group at Citi Wealth. "Firms have experienced strong growth this year and see a clear, upward trajectory for 2025."
Managing rapid Gen AI advancements will remain a strong focus for law firms, and cloud technology and cybersecurity will become increasingly important priorities. In 2025, firms will be expected to gain a stronger understanding on how technology could improve their ability to manage billing and collections.
"We anticipate further market consolidation in 2025 and beyond," said Brad Hildebrandt, Chairman of Hildebrandt Consulting. "The higher costs of running a law firm will require scale – and we expect to see more law firm M&A activity," said Brad Hildebrandt, Chairman of Hildebrandt Consulting.
About the Citi Hildebrandt Client Advisory
Analyses and projections are based on data collected from a sampling of primarily US-headquartered law firms by the Law Firm Group, as well as conversations with law firm leaders. Sources include the "Citi Annual Survey Database" of 200 US- and UK-headquartered law firms, including 43 Am Law 1-50 firms, 37 Am Law 51-100 firms, 55 Am Law Second Hundred firms, and 65 additional firms; 188 firms from the "Citi 9mo'24 Flash Survey," including 42 Am Law 1-50 firms, 38 Am Law 51-100 firms, 54 Am Law Second Hundred firms and 54 additional firms; the "Citi Law Firm Leaders Survey" of 57 large firms headquartered in the US, UK, China and India; and the "Law Firm Leaders Confidence Index" which reports the forward-looking opinions of law firm leaders from 136 firms. Percentages used in the Figures may not add exactly to 100% due to rounding.
This report is for informational purposes only based on those responses from the survey and are not intended to represent investment advice.
The views expressed herein are those of the participants and do not necessarily reflect the views of Citigroup Inc., Citigroup Global Markets Inc., and its affiliates.
The full Client Advisory can be accessed here.
About Citi
Citi is a preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home market of the United States. Citi does business in more than 180 countries and jurisdictions, providing corporations, governments, investors, institutions and individuals with a broad range of financial products and services.
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About Hildebrandt Consulting
Hildebrandt Consulting is continuing its long and distinguished history as the preeminent global consulting firm in the legal profession. With clients in over 15 countries, Hildebrandt has built up unmatched expertise in every aspect of professional firm management. Our reputation for helping firms arrive at strategic solutions comes from our knowledge of the interdependent elements that contribute to overall business performance.
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