This is the fourth-highest quarter for demand in 20 years
Demand for legal services has soared in the third quarter of 2025, with Q3 2025 becoming the fourth-highest quarter for demand in 20 years according to Thomson Reuters.
The “Q3 2025 Thomson Reuters Law Firm Financial Index (LFFI)” report revealed that demand ticked up by 3.9 percent from the previous year. According to Thomson Reuters, client activity during Q3 2025 was “sustained and robust,” indicating true expansion.
The growth was mainly driven by transactional practices as midsize law firms recorded a 6.1 percent surge in demand over the year. Mergers and acquisitions demand in particular recorded a 7.6 percent year-over-year increase; litigation demand went up by 4.9 percent, corporate law by 4.3 percent, real estate by 4.2 percent, and labor and employment by 4 percent.
Revenue per lawyer increased by an average of 6.6 percent year-over-year in law firms. Firms are also set to record double-digit growth in profits for the full year.
“The third quarter was extraordinary with a significant surge in demand, especially for transactional work, reflecting an active corporate environment despite global uncertainties,” said Raghu Ramanathan, Thomson Reuters’ legal professionals president, in a statement.
Significant technology investment quickly pushed overhead expenses up compared to direct expenses, which rose steadily. Technology-related expenditures increased to 11.2 percent in Q3; this is the third straight year in which firms invested heavily in technology and reflects the rapid adoption of technology in the legal sector.
“Law firms are sensibly balancing this tremendous growth by making strategic investments in technology and talent, taking advantage of current conditions to ensure their firms remain competitive and continue providing high-level service to clients,” Ramanathan said.
The Thomson Reuters Institute generated the LFFI, which collates data about law firm market performance obtained from Financial Insights. The data was pulled from major law firms in the US and certain global markets.
