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Law Firm Financials Law Firm Management Law Firm Profitability

Law Firm Profits Soared In 2021, Despite Increased Expenses

Strong demand growth led to a war for talent, but it was also a major driver of the industry average double-digit revenue growth seen in 2021.

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A recovery from an aberrational 2020 and the delay in returning to the office created an unusual set of factors behind the extraordinary performance seen by the law firm industry in 2021. Strong demand growth led to a war for talent, but it was also a major driver of the industry average double-digit revenue growth seen in 2021. And while the war for talent drove pressure on compensation expenses, the delay in returning to the office helped stem the anticipated spike in operating expenses, resulting in lower than expected total expense growth. As a result, revenue growth far outpaced expense increases, leading to one of the strongest years on record for profit growth for all segments of the market.

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