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Rising Expenses and M&A Slowdown Could Sink Profit Growth This Year

BY Andrew Maloney
June 01, 2022

Stifling expenses and a slowdown in transactional work during the first quarter could sink profit growth for the rest of the year, according to a new analysis of legal industry performance.

The Law Firm Financial Index (previously the Peer Monitor Index) published Monday found even robust demand growth during the first part of 2022 wasn't enough to counteract a decline in M&A, a cooling in corporate work and nearly double-digit overhead and direct expense increases from last year.

The report stated "many market fundamentals remain strong," including a three-year high in Q1 demand growth (2.7%), plus positive rates and productivity. But the quarterly composite score of law firm profitability declined for the third straight time, to 46 — its lowest point since 2009.

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