Demand for corporate, M&A practices has surged compared to Q2 2019 The company and law firm names shown above are generated automatically based on the text of the article. We are improving this feature as we continue to test and develop in beta. We welcome feedback, which you can provide using the feedback tab on the right of the page.

(Reuters) - Law firms that weathered the pandemic are seeing average demand and productivity levels return to their pre-pandemic normal, according to a Monday report from Thomson Reuters Peer Monitor Index, while some practices are outpacing even the heady days of 2019.

Peer Monitor, which is part of the same parent company as Reuters, tracked an overall 0.6% increase in demand for legal services and a 0.5% decrease in productivity between Q2 2021 and Q2 2019, the last pre-pandemic second quarter.

"Those numbers are fairly consistent with what we had seen for demand and productivity performance prior to the pandemic," said William Josten, manager for enterprise legal content at the Thomson Reuters Institute.

The increases stand out even more compared to the second quarter of last year, when coronavirus lockdowns were in full swing. Demand for legal services and productivity both increased by 7.3% between Q2 2020 and Q2 2021.

"We’re building off a very low baseline" for the year-over-year change, Josten said.

Looking at individual practices, corporate and M&A work are up in Q2 2021, regardless of whether 2019 or 2020 is used as a baseline. Compared to Q2 2019, demand for corporate work is up 3.2%, while demand for M&A work is up a whopping 11.2%.

The world is in the middle of an M&A boom, with a record-setting $1.5 trillion in deals announced globally in the second quarter of 2021 alone. As a result, law firms are on a voracious hunt for associates.

Josten cautioned, however, that outsized M&A deal values don't necessarily correlate to increased demand for corporate and M&A services, noting that a large number of smaller deals can drive as much work as fewer large deals.

"There is not a straight line correlation," he said.

Rates have increased and expenses have dropped in Q2 2021 compared to both Q2 2019 and Q2 2020, Peer Monitor found. But Josten said there's been an uptick in expense growth quarter-over-quarter, noting that law firms have been one-upping each other by offering bonuses and salary raises to their associates.

Demand for litigation is down 0.9% in Q2 2021 compared to Q2 2019. But Josten said that figure is based off a "very high baseline." At that point in 2019, "we were in the midst of a fairly prolonged period of litigation demand growth," Josten said.

The PMI numbers don't show a complete return to normal. Demand for patent prosecution and patent litigation work has dropped by 5.5% and 10.8%, respectively, from Q2 2019 to Q2 2021. But while law firms are revising their return-to-office plans in response to the Delta variant, the legal industry isn't battening down the hatches like it was a year ago.

"Law firms continue to be in a better position than anyone expected a year ago," Josten said.

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Source: Reuters

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