Record profits. Widening cracks.
2025 was another record year for law firm profitability. Firms averaged 13% profit growth, demand surged to the best year since the global financial crisis — averaging 2.5% growth and peaking at 4.4% in July — and billing rates hit new highs. On the surface, business has never been better.
Under the surface, the cracks are widening.
Marketing and business development teams are being asked to do more with less. Four out of five firms report only some or low proficiency in tracking marketing metrics, and 40% now cite fee pressure as their primary concern. Attorneys face 1,800 to 2,000 billable hour targets, leaving almost no bandwidth for writing articles or LinkedIn posts. Meanwhile, 90% of billing dollars still flow through standard hourly rates, direct expenses consume 32% of average firm revenue, and lawyer compensation jumped 8.2% year over year. Content production continues to rise, yet attorney engagement in content creation remains one of the biggest barriers to marketing success.
At the same time, nearly half of law firms still miss client calls, and only 36% explain the legal process or next steps when they do answer. Midsize firms surged ahead with nearly 5% demand growth in the latter half of 2025, while the Am Law 100 could not crack 2%. The competitive bar is rising faster than the typical firm can keep up.