Forecast for 2025: 'Go long!' big law!

2024 appears to have been a good year for large law firms, especially toward the end as corporate departments could see the light at the widely anticipated end of Federal Trade Commission Chair Lina Khan's tenure. But 2025, with the arrival of a new executive administration that is vowing to upend pretty much everything, promises to be even better for everyone in the legal profession.

"Lawyers and legal work breed at the speed of light in an unpredictable, rapidly changing, chaotic environment," said Peter Zeughauser, of the Zeughauser Group, a consultancy to many large law firms.

While it's still too early to gauge the overall financial health of law firms in 2024, a report issued Thursday by Citi Wealth and Hildebrandt Consulting found that law firm revenue growth was up 11.9% for the first nine months of 2024. Recruiters and consultants who worked with law firms in California reported a similar uptick in demand for legal talent and their services.

"2024 has been surprisingly good, especially considering the market's usual aversion to uncertainty and the presidential election uncertainty until recently. I'm surprised there wasn't more hiring pause around the election. But it's been a medium to good year for legal recruiting," said Kate Reder Sheikh, a partner at Major, Lindsey & Africa.

This trend was particularly evident in the Bay Area offices of major law firms, where the focus shifted from recruiting antitrust litigators to defend against federal challenges to proposed corporate mergers, to hiring corporate attorneys to facilitate an anticipated surge in deal-making.

Zero antitrust partners changed firms in the Bay Area in the first three quarters of 2024, but 19 corporate partners did, according to data compiled by Macrae Inc., a legal recruitment firm.

That is largely because law firms believe that the incoming Donald Trump administration will get rid of Khan, who has challenged most big mergers of the last three years. Jonathan Kanter, the head of the U.S. Justice Department's Antitrust Division, has been similarly hawkish on enforcement of corporate behavior viewed as anti-competitive and will presumably be gone as well.

"Large ticket M&A work is returning for premier firms," said Kristin Stark, principal at Fairfax Associates, another consultancy that works with law firms.

Private equity work has been especially robust, industry watchers say. It is "the hottest area in terms of moves, at least at the high end of the market," said Sarah Morris, a partner at Macrae.

Reder Sheikh said fund work will likely get much better in the new year.

"There was a lot of capital sitting idle while people were ... questioning whether we were in a recession. Interestingly, we haven't seen the same dynamic with venture capital. Venture hiring remains quiet despite the potential for similar pent-up capital waiting to be deployed," she said.

Cryptocurrencies is another area where large law firms are especially bullish. SEC Chairman Gary Gensler, a fierce critic of the industry, has already announced he will step down in January. That sent crypto markets soaring.

"Digital assets are seeing tremendous growth, and we expect more in 2025," Stark said.

Litigation work has been robust throughout 2024, a trend expected to extend deep into the new year. "The last two years have been heavily litigation-focused, including labor and employment, patent litigation and other major specialties," Reder Sheikh said.

"Litigation practices were busy this year," Zeughauser agreed.

But all legal practices are expected to do well in 2025.

"Antitrust work may quiet down, except for major tech company cases. Environmental litigation will likely slow," Reder Sheikh said.

Zeughauser said he largely agreed.

"Antitrust counseling will heat up as firms expect more combinations to get green lights," he said.

"Hard to say what will happen to contentious antitrust. Lina Khan will be gone, but Trump has rattled his saber at the Magic Seven [technology firms] for years."

But he said the skies are sunny for large law firms for the foreseeable future.

"Even if the whole economy goes to hell in a handbasket, Big Law will be hot. Go long!" Zeughauser said.

This article is the first in a series that looks at how different sectors of the legal business are performing.