Thomson Reuters and the Center on Ethics and the Legal Profession at Georgetown Law have released their 2025 Report on the State of the US Legal Market, highlighting a transformative shift in the legal profession. The report emphasizes the ongoing evolution from traditional practices to innovative business models, urging law firms to continue adapting to new technology, business structures, and client-centric approaches to remain competitive.
The report outlines the key factors contributing to the legal industry’s robust performance in 2024, including strong demand growth, rising billing rates, and controlled expenses. These factors helped law firms achieve significant profitability, but the outlook for 2025 suggests a potential slowdown in growth due to weaker demand and global economic uncertainty.
Raghu Ramanathan, President of Legal Professionals at Thomson Reuters, noted the significant role generative AI has played in shaping the legal market. “Generative AI has already had an undeniable impact, enabling lawyers to boost efficiency, productivity, and profitability. This trend will continue as more firms invest in AI and other technologies to streamline workflows and improve the quality of their work,” he said. The report forecasts that by 2029, AI will save legal professionals an average of 12 hours per week.
Looking ahead to 2025, the report identifies several key trends likely to shape the market:
Technology Investment: Firms will need to prioritize strategic investments in technology to stay competitive and drive long-term growth.
Alternative Pricing Structures: The traditional billable hour model will be increasingly challenged by pricing approaches that prioritize value and client needs.
Evolving Talent Models: The composition of law firms is shifting, with a focus on experienced lateral hires and fewer junior associates being brought on board.
Despite the strong performance in 2024, the report warns that demand for legal services may weaken in 2025 due to economic uncertainty. However, the outcome of the U.S. presidential election could lead to increased demand as clients turn to law firms to navigate potential risks in a volatile political environment.
The report stresses that firms will need to embrace agility and innovation to succeed in 2025. Those that are quick to adapt their business models, adopt new technologies, and align their strategies with the changing needs of clients will be best positioned for continued growth.
Ramanathan concluded, “The future of legal services will be defined by firms that are not only adaptable but also innovative, using technology to reshape how legal work is done and how law firms operate.”
