Iain Garfield, Director, highlights the key trends in the US legal market in 2025 and identifies the key themes for 2026.
From Iain Garfield
The US legal services market reached (on a range of estimates) approximately $397-466 billion in 2024-2025, growing at 2.5-4.8% annually. The market remains concentrated in nine major cities (NYC, D.C., Chicago, LA, Boston, San Francisco, Atlanta, Dallas, Houston), which account for 68% of all Am Law 200 attorneys.
Major Trends
Unprecedented Consolidation
Law firm mergers surged 21% in H1 2025, totalling 35 deals. First-quarter activity alone increased 5% year-over-year with 22 completed mergers.
Major 2025 Mergers
- Perkins Coie + Ashurst → Ashurst Perkins Coie: 3,000 lawyers, 52 offices in 23 countries, $2.7bn revenue (announced November 2025, closing Q3 2026).
- Troutman Pepper + Locke Lord: 1,600 attorneys, 35 offices.
- Herbert Smith Freehills + Kramer Levin: 2,600+ lawyers.
- McDermott Will & Emery + Schulte Roth & Zabel: 1,650+ lawyers, $2.8bn revenue.
- Frost Brown Todd + Gibbons: 800 attorneys, 25 offices.
- Womble Bond Dickinson + Lewis Roca.
- Ballard Spahr + Lane Powell.
Drivers include widening profitability gaps, client preference for larger full-service firms, and rising costs for AI technology and talent. The Perkins Coie-Ashurst deal is particularly notable as a major transatlantic combination creating a top-20 global firm, with Ashurst gaining its long-sought US platform while Perkins Coie expands internationally in energy, infrastructure and financial services sectors.
AI Revolution
- 31% of legal professionals personally use generative AI (up from 27% in 2023).
- 21% firm-wide adoption (down from 24% due to restrictive policies).
- 76% use AI-powered legal research, 69% e-discovery platforms, 63% cloud-based case management.
- KPMG Law US launched February 2025 as first Big Four-owned US law firm.
- AI increasingly drives operational functions beyond legal work.
Hot Practice Areas
- AI & Machine Learning Law – Regulatory challenges driving demand.
- Data Privacy & Cybersecurity – 474 specialized attorneys in D.C. alone.
- Healthcare & Telemedicine – Aging population and digital health adoption.
- Digital Assets & Blockchain – Emerging regulatory clarity.
- Renewable Energy – Clean energy initiatives despite Trump rollbacks.
- Litigation – Largest practice area (26% of partner hires).
- M&A – Strong private equity activity.
- Finance – Leveraged, Asset and Acquisition finance driven by Private Credit market.
- Restructuring & Insolvency.
Key Challenges
Immediate Pressures
- Technological debt – Outdated systems threatening competitiveness.
- Talent wars – Lateral partner hiring up 14% in 2024; some regional firms losing 30%+ of attorneys.
- Market bifurcation – Growing divide between elite global firms and everyone else, especially the regional practices.
- Pricing sustainability – Billable hour model increasingly untenable with AI productivity gains.
Strategic Concerns
- DEI commitments amid changing priorities.
- Client pushback on rates despite current strong realization.
Outlook
The market is in rude health but faces transformative pressures. Consolidation will continue as firms seek scale advantages in key markets and practice areas. Success requires embracing AI integration, adapting business models beyond billable hours, and maintaining competitive talent strategies.
Firms clinging to traditional structures risk obsolescence in an increasingly consolidated marketplace where technology and client demands are reshaping service delivery fundamentals.
