Key takeaways:

• • • Demand slowdown reverses LFFI gains 鈥� The LFFI鈥檚 Q4 2025 dip reflects a modest demand slowdown, marking a shift from rapid post鈥憄andemic rebound to a more stable, steady market.

    • Transactional practices plateaued while counter-cyclical regain momentum 鈥� Transactional practices leveled off while demand in the litigation, bankruptcy, and labor & employment practice areas accelerated, driven by rising disputes, regulatory pressure, and workforce complexities.

    • Clear opportunity for strategic realignment 鈥� Law firms may be able to shift their staffing toward growing counter鈥慶yclical areas, strengthening their pricing discipline and refining their recruiting processes.

After two consecutive quarters of improvements in the 成人VR视频庐 Institute鈥檚 Law Firm Financial Index (LFFI) score, the fourth quarter of 2025 marked a modest reversal in which it fell, albeit slightly to 61. The key driver behind this decline was a deceleration in demand that was meaningful enough to pull the overall score down and may signal that the market is moving into a more normalized rhythm 鈥� less snapback growth and more steady performance.

To understand what this means in practical terms, it helps to look beneath the headline numbers and examine not just what happened in Q4 2025, but also over the last two years. Then, a clear narrative emerges: Transactional work 鈥� M&A, corporate general, real estate, and tax 鈥� was powering the market in Q4 鈥�24 but largely plateaued in Q4 2025. Meanwhile counter-cyclical practices 鈥� litigation, bankruptcy, and labor & employment 鈥� regained momentum during the same timeframe.

Put differently, the practices that powered growth in the last year are fading as measured against their own baselines, while those practices that performed less strongly then are now starting to take the lead for the legal industry.

Practice level demand dynamics

By applying a magnifying glass to each transactional practice鈥檚 behavior over the past three quarters, one can identify a few important contrasts. The practice that stands out for its lowest growth in Q4 2025 is tax 鈥� and, in fact, across the final quarters of the last three years (even when it had a good performance in early 2025), that momentum didn鈥檛 translate to the end of the year. This indicates that tax has constantly posted the weakest demand growth, bottoming out at -0.9% in Q4 2023, when it was again the practice with the lowest growth. Even in the Q4 2024 鈥� a stronger year for most practices 鈥� tax grew only 1.5%, well below both its transactional and counter-cyclical peers.

This persistent underperformance may reflect several factors, such as increased internalization of routine tax work by corporate tax departments, pricing pressure in highly standardized matter types, and slower deal flow in M&A reducing ancillary tax activity. Whatever the cause, tax鈥檚 muted trajectory has had a dampening effect on overall transactional momentum and has acted as a drag on top-level demand growth.

On the other side of the room, counter-cyclical practices strengthened in Q4 2025 after a softer Q4 2024, nearly reaching the same growth that they presented in Q4 2023. Collectively, these practices rose to around 3.2% in Q4 2025, compared to about 1.5% growth in Q4 2024. This represents a true rebound after an unusually strong 2023, which was likely caused by lingering pandemic-related effects and the period鈥檚 surge in inflation.

Litigation leads the pack

Litigation provides the clearest example of this resurgence. During the Q4 2025, litigation led with roughly 4.3% growth, compared to 2.4% in Q4 2024. Indeed, the practice closed 2025 with renewed momentum, making it the standout in performance among major practices.

Litigation鈥檚 acceleration in late-2025 suggests that court systems have fully normalized, backlogs have largely cleared (in relative terms), and organizations are encountering a more contested operating environment. Regulatory scrutiny, geopolitical risk, supply chain disputes, and workforce-related conflicts all contribute to a litigation profile that is less dependent on economic cycles and more tied to the complexity of today鈥檚 business environments.

By contrast, after bankruptcy demand growth surged to 6.4% growth at the height of the pandemic recovery in 2023, the practice area experienced a dramatic cooldown the following year, falling to 0.4% just 12 months later. However, bankruptcy recovered modestly to 2.8% in Q4 2025, although still far below the extraordinary levels seen during its previous spike.

Taken together, these patterns suggest that corporate clients may be contending with a broader set of pressures 鈥� regulatory instability, workforce management complexity, and the downstream effects of post-pandemic backlogs 鈥� that could continue to generate steady legal demand.

Counter-cyclical trends reflect opportunity, not just reactive demand

The upswing in demand growth for counter-cyclical practices is not necessarily a sign of economic turbulence, however. Indeed, it shows the market can be stable and still produce more litigation, it can be cautious and still require restructuring advice, and it can be steady and still demand intensive employment support. The fact that transactional demand continues at a solid, albeit slowing pace, shows that this is not necessarily the recession-boosted practices that are driving law firm performance.

In fact, in a market in which transactional demand has stabilized and disputes and compliance work is rising, many law firms can use the moment to better align their operating model with the practice areas in which momentum is building and by aligning with actual demand.

For example, as litigation, bankruptcy, and labor & employment areas see higher demand growth, a firm may benefit from adding capacity in those areas, improving staffing leverage, and preventing partner bottlenecks. Meanwhile, steady but flattened transactional demand could call for disciplined, pipeline鈥慴ased hiring.

The practices that powered growth in the last year are fading as measured against their own baselines, while those practices that performed less strongly then are now starting to take the lead for the legal industry.

In addition, lower demand for transactional practices can represent an opportunity for law firms to refine their recruitment processes, as recruiters can take the time to seek those candidates whose skill sets offer added value. Prioritizing the hiring of candidates who bring fresh ideas and technological capabilities to support the tech-driven evolution of legal services may be the push some law firms need to meet the expectations of clients that are increasingly demanding greater value for their dollars.

This does not mean transactional work should be deprioritized, however. Instead, firms should adopt a dual鈥憈rack strategy: Optimize and streamline transactional capacity for efficiency, while strategically expanding counter鈥慶yclical teams in the areas in which demand is accelerating.

Making the strategic choice

On the face of it, it seems that many law firms face a strategic choice between doubling down on counter鈥慶yclical practices or continuing to prioritize transactional work. Current demand performance suggests counter鈥慶yclical areas offer the clearer near鈥憈erm opportunity 鈥� they are growing, resilient, and driven by structural forces such as regulatory scrutiny, workforce disputes, geopolitical risk, and more complex compliance environments.

Further, this environment elevates the importance of pricing discipline. As demand normalizes, clients become more price鈥憇ensitive and will expect efficiency and transparent staffing. Litigation and labor & employment may have more pricing power today, but disciplined pricing across all practices is critical for margin stability.

Indeed, the widening gap between transactional and counter鈥慶yclical practices signals a market in transition. The opportunity for firms lies in balancing these dynamics and aligning staffing, pricing, and operations to navigate uneven growth and capture value in a more complex legal environment.

You can download the听成人VR视频 Institute鈥檚 Q4 2025 Law Firm Financial Index听here

In Q4 2024, all the major metrics in the legal industry moved in the right direction in a year-over-year perspective. Demand accelerated 3.3% compared to Q4 2023, and worked rates and fees worked grew steadily 6.6% and 9.7%, respectively, during the same timeframe. In fact, the combined performance of demand and lawyer growth pushed productivity up 0.4% in Q4. While it would not be fair to say that these results are bad in any case, an increase in direct and overhead expense growth, as well as smaller gains in demand and productivity compared to previous quarters ended with many law firms seeing lower profit performance to close out 2024.

The shift between transactional & counter-cyclical demand

Early 2023 signaled the beginning of a new two-year trend in the legal industry that persisted until recently. This trend was characterized by a significant acceleration in demand for counter-cyclical practices, which tends to rise during slowdowns in normal business cycles and includes litigation, bankruptcy, and labor & employment practices. This counter-cyclical acceleration seemed to come at the expense of demand for transactional work, such as in corporate general, M&A, real estate, and tax practices.

During 2023, law firms averaged a 2.9% growth in demand for counter-cyclical practices, while experiencing a 2.3% decline in growth for transactional ones. This trend continued over the first three quarters of 2024, with counter-cyclical practices growing by an additional 2.7% on top of 2023鈥檚 strong growth. Meanwhile, transactional practices increased by just 1.4% year-over-year.

However, Q4 2024 reversed this trend, for the first time in years, exhibiting growth in transactional practices that outpaced that of counter-cyclical practices. While both practice types did experience growth 鈥� with transactional practices increasing by 4.0% and counter-cyclical practices by 1.5%, compared to the year-earlier period 鈥� the script had been flipped as corporate general, M&A, and real estate emerged as the top three fastest-growing practices in Q4. Interestingly, all transactional practices exceeded their year-to-date (YTD) growth levels in Q4 2024, while all counter-cyclical practices showed deceleration in Q4 compared to their YTD growth.

From a segment perspective, Q4鈥檚 transactional comeback was led by Am Law 51-100 firms, followed by Am Law Second Hundred firms, with the former averaging a 4.6% growth and the latter 3.7% in Q4, compared to Q4 2023. Midsize law firms increased their demand in these practice areas by 3.2%, while Am Law 1-50 firms saw a 3.0% increase. Apart from the Midsize segment, all other segments experienced a slowdown in their counter-cyclical growth in Q4, clearly showing the beginning of a trend in the overall industry.

What could 2025 hold for demand?

, expectations for the United States economy in 2025 reflect a solid labor market and strong consumer spending. However, while election-related ambiguity has been resolved, uncertainty from several perspectives still lingers. The new administration has introduced policy uncertainty regarding tax, regulation, immigration, as well as fears about potential trade wars. These policies could result in diminished GDP growth and additional pressures on inflation, which could also affect activity in the legal sector.

Our industry forecasting models powered by Financial Insights and broader economic data suggest a much more moderate growth environment for legal services during the first half of the year, primarily due to the disadvantages associated with working days and the strong baselines established in the previous year. While our models cannot predict the direction and impact of current political administration changes, history has shown that long-run growth typically dissipates quickly for the law firm market.

The level of the slowdown is still an open question. However, the shift of demand in which transactional practices surpassed counter-cyclical ones in Q4 2024 is expected to continue throughout 2025, our forecasting models suggest. In fact, some transactional practices 鈥� particularly corporate general 鈥� will likely continue accelerating throughout 2025.

On the other hand, counter-cyclical practices, such as litigation, might experience a deceleration in their growth rates compared to the previous year. A concern that arises from this scenario is whether the growth that is beginning to be seen in transactional practices will compensate for the potential slowdown in the counter-cyclical area. As a result 鈥� and in line with what our models are estimating 鈥� overall demand performance this year may be weaker than it was in 2024. 听

The deceleration of counter-cyclical practices can bring certain challenges in the near future, particularly for those law firm segments that have recently relied heavily on these practices to grow demand and revenue. Yet, considering the current administration’s aim to be more business-friendly, there could be more upside risks in the industry than our models currently foresee. In this sense, law firms should remain proactive and continue strengthening existing client relationships, enhancing operational efficiency, and investing in technology. Also, law firm leaders may want to seek opportunity in other geographic markets or practice areas in order to open additional revenue streams. This way, law firms will be able to navigate the challenges that 2025 could bring with remarkable success.

You can download the recent Q4 成人VR视频庐 Institute Law Firm Financial Index report here

This surge, excluding the exceptional second quarter of 2021 when growth was being compared against pandemic-induced lows, marks the fastest pace of growth in fees worked since we鈥檝e been compiling this data. Essentially, this makes Q2 2024 the fastest growing organic fees worked total since the Global Financial Crisis of 2007-鈥�08.

Indeed, this uptick in fees worked substantially contributed to an 8.8% growth in profits per equity partner (PPEP) on a rolling 12-month basis, placing firms in an enviable position through the first half of this year.

Diversification safeguards against volatility

One of the most striking aspects of this past quarter’s performance is the diversification of fees worked growth across various practice areas. The chart below shows the impact on overall fees by each practice grouping, with weighted growth shown by the proportion that each practice group comprises of total fees. Unlike the previous revenue boom of 2021-鈥�22, in which growth was predominantly driven by transactional work, the current landscape showcases a more balanced growth pattern.

The average firm in Q2 2024 witnessed nearly equal growth in fees across transactional, counter-cyclical, and other practice areas such as regulatory, trusts & estates, and environmental law. Specifically, transactional work contributed 3.2 percentage points of the total 9.2% growth, counter-cyclical practices added 2.8 points, and other areas accounted for 2.7 points. This diversification places law firms in a position today in which they can potentially thrive irrespective of typical economic cycles.

As seen on the right side of the chart, firms in the Am Law 51-100 and Am Law Second Hundred segments are prime examples of how fees worked growth in Q2 has come from a diversified practice mix, enhancing firms鈥� resilience to market fluctuations. Should there be a decline in either transactional demand or counter-cyclical work, as has happened in the past, many firms will be well positioned to sustain their performance due to their balanced portfolio of revenue streams.

That said, of course, there are notable exceptions within specific segments of firms. Midsize firms, for example, are experiencing the majority of their demand and fees worked growth from counter-cyclical practices, particularly litigation. This heavy reliance on a single practice area could pose risks if demand shifts. Additionally, firms within the Am Law 50 are exhibiting another focused strategy, relying heavily on transactional practices which made up 45% (4.1 percentage points of their overall 9.2% growth) of their total fees growth in the second quarter.

While this more leveraged strategy may yield multiplied success during favorable market conditions, it also poses significant risks during downturns. If anything happens to transactional fees, the Am Law 50 firms are going to lose their key source of growth and could see their PPEP growth lose its positive trajectory. Similarly, those Midsize law firms heavily reliant on counter-cyclical practices like litigation could face substantial challenges if demand in these areas wanes.

Enjoying a more stable position

Overall, however, the average law firm is currently in a more stable financial position from a revenue and expense perspective as well, when compared to the same 2021 short-lived period of prosperity in 2021-鈥�22. Through the second quarter of this year, firms have managed to control their expenses more effectively than during the previous revenue surge, and by doing so, they have thus far avoided carrying the potential burden of rapidly escalating costs should the pace of top-line revenue slow.

It appears that firms have learned from past experiences, particularly since the transactional boom, and have adopted more prudent expense management practices both in aggregate and on a per-lawyer basis. While firms are only increasing their PPEP by 8.8% compared to the 11.5% figures seen during the transactional boom, firms are not having to pay nearly as much for that growth either. Total expenses are increasing by 5.0% and per lawyer costs are increasing by 2.9%; while these figures can be improved on, they are far lower than what was seen during the transactional boom when both aggregate and per lawyer expenses were growing at nearly double digits.

Should revenue begin to slide, firms will not be left paying the exorbitant bill they were left with last time.

In conclusion, the second quarter of 2024 has showcased a balanced and strategic approach to both revenue generation and expense management among all strata of law firms. The impressive 9.2% growth in fees worked highlights the sector’s adaptability and multifaceted growth across various practice areas, ensuring that firms can navigate different economic conditions and an uncertain future. This prudent approach is mirrored in the careful control of expenses, which are significantly lower than during the previous boom.

The varying strategies of different firm segments 鈥� such as the Am Law 50’s focus on transactional work and Midsize firms’ reliance on counter-cyclical practices 鈥� underscore the diverse paths to success. However, it may also demonstrate a strategic leaning in on strengths that can suggest some acceptance of greater volatility in performance.

More broadly, the average firm鈥檚 skill in maintaining a balanced approach will be crucial in its ability to capitalize on future opportunities and mitigate potential challenges, thus ensuring continued growth and resilience in an ever-evolving legal market landscape.

You can download a full copy of the 成人VR视频庐 Institute Q2 Law Firm Financial Index report here.

Key takeaways in Q1

• The large law firm industry has improved its financial health in Q1 2024, driven by strong revenue performance and a slow-down in their expense growth.
• Demand growth has shifted from Midsize law firms to the Am Law Second Hundred, which has greatly increased that segment鈥檚 fees-worked growth. The Am Law 50, in comparison, has traded some demand for record rate growth.
• Adjusting for inflation, law firms’ investment in technology has reached its highest level since at least 2014. This suggests that despite stringent management of overhead costs, firms are prioritizing technological enhancements as essential for their future success.

The LFFI score has seen a modest increase in Q1 2024, which indicates an overall improvement in the industry’s financial health. This uplift is primarily driven by multiple factors but a notable development in Q1 was an acceleration in worked-rate growth with the new year鈥檚 rates, achieving its highest levels of growth since the financial crisis of 2007-2008.

The dynamics of demand growth have shifted notably in 2024, with the Am Law Second Hundred leading in demand growth, a pivot from the smaller law firm market dominance observed in 2023. This year, Am Law Second Hundred firms and those ranked in the 51-100 of the Am Law list have demonstrated substantial fees-worked growth. Midsize law firms remain competitive, but the segment’s pace has slowed compared to the previous year’s leading performance. Meanwhile, the Am Law 50 has traded some demand for record rate growth, a strategy that continues to favor that segment鈥檚 financial outcomes.

The Q1 2024 LFFI report outlines an industry on the path to continued financial health with several segments adapting and thriving in changing market conditions.

Litigation work emerged as a key driver of growth in Q1, experiencing its strongest uptick since the post-pandemic rebound in 2021. This performance strongly aligns with overall segmental demand growth, underscoring the practice area’s pivotal role in the current market landscape. Transactional work has stabilized after several quarters of decline, with small growth levels enough to sustain the new higher rates that add positively to law firm income.

Convergence of revenue and expenses

A significant observation from the Q1 LFFI report is the convergence of expense growth and revenue increments. Direct expenses grew at a decelerated rate from previous years, reflecting a cooling down from the aggressive wage growth battles of 2021 and 2022. Overhead expenses also saw a reduction from its previously high pace, even as law firms continued to invest heavily in technology. Notably, this rate of investment, once controlled for inflation, was the fastest pace of real tech investment since at least 2014, suggesting that law firms are actively jumping onto key technologies despite the economic difficulties of the last couple years.

Overall, the Q1 2024 LFFI report outlines an industry on the path to continued financial health with several segments adapting and thriving in changing market conditions. The law firm industry’s ability to manage expenses while capitalizing on strategic rate increases and demand opportunities has positioned it well for the rest of 2024 and beyond.

This robust start to the year provides a solid foundation for optimism in the law firm sector, suggesting that the strategies currently employed are not only effective but sustainable. So long as further black swan events can be avoided, law firms may finally have an opportunity to catch their breath.

You can download the Q1 2024 成人VR视频 Institute’s Law Firm Financial Index report by filling out the form below:

The statement seems harmless enough, placing a simple emphasis on winning; however, it breeds the belief that if we are not the absolute first, there is no consolation or purpose. While in a head-to-head competition, the loser always finishes last, but what happens when we are competing on a much broader playing field? In the legal industry, what happens when a law firm is not the first to market in a particular practice area?

In the 2010s, when self-driving vehicles began to make their way into the market, there was a limited population of lawyers whose practice focused on self-driving technology to help auto-making companies navigate the regulatory unknowns or address the nuances that self-driving vehicles would face in litigation. The access to such a niche practice area was limited, not just because the technology was new, but because the practice areas that supported those technologies were still in their infancy.

As self-driving technology became more prevalent, case law naturally built up, competition within this niche became more fierce. This is a prime example of a maturing practice area and it represented a shift in how law firms would compete for years to come.

Industries evolve, the markets for new technologies and industries grow, and eventually, so does the competition. As this happens, how law firms deliver and win work from their clients evolve too. Acknowledging the maturity of a particular practice area is the key to unlocking a law firm鈥檚 competitive advantage.

Be first to market: Early in a practice area鈥檚 lifecycle

Law firms that are first to market are the true pioneers. These are firms that are trusted advisors that can help navigate the unknowns in the early days of a corporate client and industry. There will only be a select group of firms that are at the forefront of an industry; and as an industry grows, these law firms that were first to market will have to either have to adapt to stay competitive as more law firms enter the market.

Be smarter than the market: A maturing practice area

While there are very few firms that are first to market, the number of law firms entering the market will grow as the practice area for a particular industry starts to mature over time and the case law begins to build. That means, however, that those law firms will have to differentiate themselves by their expertise. More mature clients and industries don鈥檛 just need services, they need the best services that enable their core business to thrive.

Be better than market: A fully mature practice area

When practice areas start to have decades of case law, it’s not just enough to have the right expertise but legal services have to be delivered in a way that empowers the business to grow. While expertise will always be a consideration, law firms in mature practice areas have to think beyond what services they provide and think more about how they provide those services. Factors like lower costs per matter, faster resolutions, and proactive project management can start to differentiate a law firm from the rest of the pack. This is where the overwhelming majority of law firms are competing for work every day.

Be yourself: All the time

Law firms have to embrace the fact that pure expertise is not going to provide the same competitive advantage in a mature practice area that it did when a practice area was in its infancy. When law firms are able to lean into the level of maturity in which their practice area exists, their growth potential accelerates by a multiple.

To be sure, most successful law firms are not the first ones to blaze a trail into a new practice area. Instead, these firms have found ways to embrace the maturity of their practice area and help their clients’ businesses to flourish.

Ricky Bobby might have hit the mark in our hearts, but when it comes to competing in the practice of law, we might have to change his guidance a little: 鈥淚f you鈥檙e not first, you’re definitely not last.鈥�

1. 1. 1. to provide a sense of security and stability, even in the midst of many unknowns about how COVID-19 will affect work environments and the economy 鈥� indeed, these meetings can minimize some of the damage to morale among those already suffering with depression or other mental health issues and more;
      2. to maintain a sense of connection among the group members, which is more critical than ever when there is such uncertainty in the world;
      3. to continue to work on projects that can contribute to the group鈥檚 success once the pandemic subsides, laying the groundwork for solid practice group performance and giving members something positive to focus on where they can feel their contributions (and they) matter; and
      4. to allow group members a chance to share their concerns, issues, and questions about their work matters, working from home, or any other topics they may want to discuss.

The isolation of working from home, while initially seen by some as a bonus (i.e., no commute time and costs, greater flexibility, etc.) can have many negative effects on those who are used to an office environment full of colleagues with whom to share ideas, have live discussions, and generally socialize. All of this interplay creates the happiness hormone, oxytocin, that results in higher levels of positivity and better mood.

VUCA 鈥� Volatility, Uncertainty, Complexity & Ambiguity 鈥� has become a common acronym in the business world in recent years. And while it has been discussed in many law firm meetings before, the COVID-19 pandemic brings these concerns to the forefront of our national and global discourse. Practice group leaders can play a key role in assuring and calming their members鈥� concerns as the group communicates, works on projects, and plans for changes in its markets that may be impacted by the outbreak.

The isolation of working from home, while initially seen by some as a bonus can have many negative effects on those who are used to an office environment full of colleagues with whom to share ideas, have live discussions, and generally socialize.

Even in more stable times, practice group meetings are one of the key foundations of building a high-performing practice group. Indeed, creating high-performing practice groups will be a topic for a future post in this series, but some of the keys to building these groups include establishing shared goals, communicating clear roles and responsibilities, and providing face-time for interaction (even if that is virtual). One of the important items on every practice group meeting agenda should be discussing group goals and the progress made toward them. This tells the group that goals discussed during the annual practice group planning process are actually meaningful and not just something the group puts in a plan in order to obtain its marketing budget from the firm.

Also, at a time of great uncertainty, developing goals and actions together makes group members feel more empowered and less victims of circumstances that are just waiting for the next bit of news. While we cannot predict how long the current crisis will last or what the total and ongoing affect will be, we can take steps forward to plan for our role in the changing market and where we want to land when the pandemic ends.

Remember Why You鈥檙e Meeting

Key objectives of practice group meetings include:

• • • creating a sense of shared destiny and group cohesion;
    • keeping the group thinking strategically about where clients and the group鈥檚 business is trending; and
    • sharing information that each member needs to know to feel connected, perform their work, or otherwise participate as a group member.

In our research across 20-plus years working with practice groups and practice group leaders, effective meetings are a core to success. We have seen observed that the most success practice groups are the ones that not only show positive economic performance, but also form a truly cohesive team. The least successful, we鈥檝e noted, is a group of 鈥渟olos鈥� functioning under the banner of a practice group.

As we move more into virtual workgroups now, some important ways that practice group leaders can continue to reach these objectives and engage group members, include:

• • • Sharing any successes that the group has had a hand in, such as helping a client navigate the current uncertainty, handling a new matter, landing new work, etc.
    • Communicating how the firm is handling the way the pandemic is affecting clients or impacting the firm so that members feel less worried about the future.
    • Using polling software so you can get members to participate actively even though they are not in meeting rooms together. The many inexpensive polling software tools available can allow you to have anonymous participation in surveys. Engaging the team in this way could cover everything from how they are feeling about remote working or the bans on travel, to how their clients are being affected by COVID-19 and the economy.
    • Asking various group members to prepare short (like, 5 minutes) presentations or reports on topics that are important to other group members, such as a recent client meeting, a trade association event (many of which are being rescheduled as virtual events), a RFP process the group won or lost, an element of the group plan that has been implemented, or a current matter of significance.
    • Ensuring people representing different office locations, practices within the group, levels of experience, etc. are encouraged to speak during the meeting.

Continuing these approaches and monthly meetings will be very beneficial to your practice group during this time of virtual working. It will also lay a foundation for better cohesion after the pandemic subsides and business starts to get back to 鈥渘ormal鈥� 鈥� whatever that will look like then.

Too many law firm leaders see industry or client teams simply as a part of their marketing program or a cross-selling strategy, rather than a part of the fundamental structure of how they manage their law firms. As a result, in many firms, these initiatives have failed.

The Role of Industry Teams

Practice management basically means managing the firm through smaller business units (BUs) that are responsible for strategy, profitability, and management of the work process, client relationships, and talent. These BUs can be based on substantive practice areas, offices, industry niches, and clients. For at least the past 15 years or so, many firms have had a matrix structure consisting of all four of these categories, which are dimensions of effective practice management and are important to the success of most firms (see chart below).

The key question in a firm is which dimension will be the primary one through which the people, strategy, and profitability are primarily managed. Any of the four levels can be the primary one 鈥� but they cannot all be equal. Lawyers must be willing to be a member of only one primary BU (even though most firms allow them to be a member of several secondary groups). Most lawyers in a firm do not practice primarily in only one industry, so they are unwilling to be pigeonholed in only one industry BU as a primary. Usually, they are more willing to be in one practice-based BU as their primary grouping.

At the same time, managing a law firm along a single dimension (e.g., using only practice groups based on substantive practice areas as BUs) tends to be inadequate and ineffective. Within the strategy of most law firms today, there is a strong focus on core clients and industry specialization. As a result, there is a need for additional secondary BUs (in addition to offices) to manage this focus 鈥� these are generally called industry and client teams.

Even in firms that have some industry-based groups within their traditional practice group structure, there are often major areas of industry focus that are too comprehensive to be within a single practice group. For example, in many firms of 300 or more lawyers, there are some industry niches where 50 to 100 of a firm鈥檚 lawyers have experience across many substantive practices. Thus, it is important to have organized your firm鈥檚 industry BUs to bring together lawyers across a wide spectrum of practices 鈥� for purposes other than the day-to-day management of the people or work which is handled in the primary substantive practice-based BU.

The objectives for industry teams vary but typically include:

• • • Identifying and enhancing the firm鈥檚 market share and visibility within an industry (through organized approaches to thought leadership, business development, and client management);
    • Helping to integrate lawyers from various offices and practice groups to prevent 鈥渟ilo鈥� approaches to business development; and
    • Differentiating the firm based on the industries it has distinctive expertise in.

Best Practices for Successful Industry Teams

Here are some of the best practices from our work with more than half the AmLaw 200 as well as from research for several books written on practice management:

• • • Practice management (by any of the four dimensions discussed above) does not work if lawyers do not accept accountability to the primary BU where they contribute a significant amount of their time and are managed by their leaders. Lawyers who work in only one industry are rare in law firms today, although as firms continue to grow, it will become more common. In the future, more professionals will likely be willing to commit to a primary industry group as their 鈥渉omeroom鈥� and their substantive practice group may become a secondary management dimension for maintenance of specialization, risk management, and related issues only. However, today, that is not an effective way of managing people and profitability, even as industry groups remain critical for thought leadership and business development (what are often called 鈥済o to market鈥� BUs).
    • Whether industries are a primary or secondary dimension of the firm鈥檚 structure, the leaders need to report to a member of firm management and be accountable for their time and energy, for achievement of financial and other performance metrics (which depend on whether it鈥檚 a primary or secondary level group), and for building a high-performing team. Just as most firms have trained their practice group leaders (PGLs) in various areas of management and leadership, industry group leaders should be part of those programs and receive high-quality training as well.
    • There should be a written job description for industry group leaders, just as the vast majority of firms have detailed job descriptions and expectations for their PGLs.
    • Roles and responsibilities for all these leaders should be defined, and the overlap or intersection between PGLs and industry leaders should be clarified as much as possible. In too many firms, this has not been done, and therefore unnecessary tensions arise, or confusion exists between these two roles.
    • There should be regular meetings of PGLs and industry leaders to share best practices, obtain training, and generally communicate about their group鈥檚 issues and challenges.

With these in place, your firm鈥檚 practice and industry groups should be successful.