Corporate law firms headquartered in Texas are witnessing slower growth in revenue and a more significant decline in demand for legal services from clients so far in 2019 than their competitors across the country.
New data from Citi Private Bank’s Global Law Firm Group Advisory Service shows that Texas-based law firms have seen their revenues increase 1.3% during the first nine months of 2019 versus the same time period in 2018. Nationally, law firm revenues are up 5.1% during that same time period.
Citi reports that the Texas firms saw a 3.9% decline in demand – or hours billed – between Jan. 1 and Sept. 30 and that overall headcount at the Texas law firms declined 1%. Nationally, demand for legal services is up nearly 1% and law firm head count increased by 2%.
The only reason revenues are up even as little as they are is due to a 4.7% increase in the hourly rates that the Texas firms are charging their clients, according to Citi law firm analyst Gretta Rusanow.
There is good news for Texas law firms, according to Citi. Expenses grew just 1.1% and compensation is up only 3.2% — both far below the national averages.
“I surveyed 53 large law firms across the U.S. asking where they see the biggest potential for growth and Texas ranked near the top at fourth,” Rusanow said, adding that New York, Washington, D.C. and Northern California placed higher.
The Citi data does not include revenues or performance from national law firms operating in Texas, which have witnessed extraordinary growth during the past decade.
Texas Lawbook research published in April showed that national law firms now employ 44% of the 6,750 full-time lawyers working at the 50 largest corporate law firms operating in Texas – triple the number in 2015.
Only 22 of the 50 largest corporate law firms with offices in Texas are headquartered in the state. In 2014, 38 of the top 50 were based in Texas.