The headlines kept saying 2025 was another banner year. But if you’re a partner who actually lived through it, you know it was more complicated than that.
Newton’s third law says that for every action, there’s an equal and opposite reaction. To me, that describes the dynamics at play among BigLaw firms over the last twelve months. Revenue grew, but margins shrank. Firms called for RTO, and partners said, “No thanks.”
It was action and reaction all year long. But what did that mean for attorneys?
The money paradox: revenue grew, and margins decreased
2024 ended strongly with 13.3% revenue growth. Consultants were predicting 2025 would be even better. One industry expert advised firms to “go long” on BigLaw, noting that even if the economy struggled, law firms would stay hot.
So when the numbers started rolling in for 2025, no one was surprised to see more records.
BigLaw revenue jumped 11% in the first half of the year, and Am Law 50 posted 12% revenue growth through Q3. A&O Shearman hit $3.7 billion in their first post-merger year. Every quarter brought another announcement about firms breaking records.
What drove this growth? Marketing, for one, showed a 43% return on investment, as well as a 13% increase in win rates. (But there’s a caveat: these numbers reflected an approach focused on systematized collaboration rather than individual rainmakers.)
But that wasn’t the complete picture. Expenses rose 9.1% right alongside revenue. In California, expenses outpaced growth, and in Texas, firms reported 20% revenue increases while demand actually declined. They were billing work from 2024 rather than generating new business.
And those strong Q1 numbers? Industry analysts called it inventory-driven revenue; firms were collecting on old work, not actually seeing new demand come through the door.
When revenue and expenses both climb that fast, something has to give. And it did. Willkie laid off staff in August while offering retention bonuses to attorneys at the same time.
Other firms rolled out complex profitability metrics that partners started calling “toxic to culture.” Origination credit battles became more pronounced.
The talent war contradictions: spending big on attraction, struggling with retention
Demand slipped in Q1 2025, with the Thomson Reuters index dropping 13 points, and lawyer productivity fell 2.4%.
Yet firms continued to compete for talent. Direct expenses increased 7.6% in Q1 as firms continued to compete for talent and pay performance bonuses.
Associate attrition climbed to 20% in 2024, up from 18% in 2023. Associates were leaving earlier, too—within four years instead of the historical five-year pattern. Partners were on the move, too. Am Law 200 firms saw 2,306 partner moves through August 2025, up from 2,099 the year before.
Another big influx of attorneys came from the government; the number of federal attorneys joining BigLaw rose by more than 225% in the first 10 months of 2025.
Firms responded with what they could control most directly. And that was compensation. A few data points from the year that stood out include:
- Average partner compensation hit $1.4 million in 2025, up 26% since 2022
- Eighth-year associates now earn between $420,000 and $435,000
- Year-end bonuses reached up to $115,000-$140,000 for senior associates
- Davis Polk offered $25,000 stipends to 1Ls in November
- A Houston boutique raised first-year salaries above BigLaw rates to $235,000 in September
- Axinn raised first-year salaries to $250,000 in September, as well as special out-of-season bonuses ranging from $6,000 to $25,000
And to add to the competitive spirit, some BigLaw firms are going above and beyond. Morrison & Foerster, for example, issued high-hour bonuses that ranged from $16,500 to $161,000 and merit incentives, and senior associates at Susman Godfrey got up to $280,000 in their (as of publication) market-topping bonuses.
However, BigLaw isn’t getting the final word here. Some elite boutique firms are matching or topping their numbers; Dunn Issacson Rhee; Pallas Partners; and Wilkinson Stekloff have all announced above-market associate bonuses.
Yet that wasn’t enough to keep attorneys from moving. Take Miami, which saw associate mobility jump 35% year over year. Regardless of location, partners were leaving over how firms implemented profitability metrics, even at places where compensation was strong. Associates cited feeling undervalued, unclear leadership direction, and cultures that emphasized hours over collaboration and growth.
The problem ran deeper than just losing people. When firms tried to replace them with lateral hires, those new partners weren’t bringing the business firms expected. Client portability kept dropping; by 2025, laterals brought an average of 8.1 clients, down from 15 in 2022. Firms began asking more detailed questions about which clients would follow and by what percentage.
But in some cases, “goodbye” was a “goodbye for now.” 2025 saw the rise of boomerang partners and firms building entire programs around welcoming returning former partners. And 2026 may play out differently, with 82% of large firm leaders stating they plan to increase equity ranks over the next two years.
What’s driving disruption: return-to-office and AI
By early 2025, the return-to-office debate had been simmering for years. Many firms had settled into hybrid arrangements with some version of three days in the office, flexibility around the edges. AI was touted as the bright, shiny promise that would transform everything, boosting efficiency, cutting costs, and letting lawyers focus on higher-value work.
Both issues came to a head in 2025. Firms facing talent shortages and margin pressure needed to make decisions, and the decisions they made revealed how far apart management and their lawyers really were.
The office battle
Sullivan & Cromwell started the year by requiring associates in the office five days a week. Sidley Austin gave less than one week’s notice before implementing a four-day mandate in May.
By November, four-day attendance requirements were spreading across the Am Law 50. A&O Shearman, Davis Polk, Latham, Paul Weiss, Skadden, WilmerHale, and others all joined the push.
(And if you’re going back to the office, you need the space. 2025 was the strongest year for law office leasing since the pandemic.)
But partners had strong feelings about these mandates. Survey data from early 2025 showed that 50.2% of partners gave a resounding “hell no” to office attendance mandates, with only 6.1% believing full-time office work made sense.
It’s worth noting that some firms took a different approach. Notable examples are Husch Blackwell, whose virtual office program grew 16-fold by August, and Akerman, which created an entirely new leadership role focused on promoting flexible work. (Significantly, Akerman is also not mandating that people come into the office.)
Also important to note: The majority of Am Law 200 firms kept flexible hybrid or fixed hybrid work schedules, with only 7.7% mandating five days a week.
What separated the two groups? The most elite firms leveraged their status to push for these mandates despite partner sentiment, while others remained flexible. It felt like a test of whether prestige could override what lawyers, even rainmaking partners, actually wanted.
AI: promise vs. reality
AI has been a major driver of conversation in 2025, and the legal industry was no exception. AI was supposed to solve everything in 2025.
But the industry logged at least 10 major AI blunders by July, from Latham’s citation errors to K&L Gates’ $31,000 debacle. By October, clients were asking uncomfortable questions about whether firms were using AI to cut costs while still billing at full rates.
Still, the proverbial jury is out. Despite missteps, firms are preparing for massive AI infrastructure investments while simultaneously rethinking their 2027 associate class sizes.
Law schools are also preparing the next generation of attorneys to deal with AI in the legal industry; more than half the law schools that responded to an ABA Task Force on Law and Artificial Intelligence survey shared they offer or plan to offer courses on AI and the law.
The strategy split: growth vs. profitability, scale vs. specialization
Entering 2025, firms faced complex market signals. Demand was uneven, strong in some practice areas, soft in others. Talent costs kept climbing. Clients were pushing back on rates while still expecting top-tier service. And the narrowing profit margin meant firms couldn’t necessarily keep doing what they’d always done.
To strategically address these issues, some firms doubled down on scaling. Others pulled back to focus on high-margin work. Some explored different partnership models and practice areas altogether.
Where firms scaled
Kirkland’s credit lines continued to grow to support its expanding footprint and its move into mass torts practice. A flurry of merger talks accelerated in the second half of 2025, driven by rising talent costs.
Real estate investments also reflected growth intentions. For example, Covington added 35,000 square feet in New York to accommodate 30% growth in attorneys.
Where firms pulled back
By late 2025, some firms were abandoning the “full-service” model entirely. BigLaw’s retreat from low-margin markets was wider than initially apparent. The focus shifted to high-margin cities such as New York, Washington, DC, London, and Chicago.
Where firms merged
In 2025, 36 mid-sized firms were involved in mergers, up from 17 in 2021. For smaller firms or mergers-of-equals, activity rose from 45% in 2021 to 86% in 2025.
This indicates firms are taking matters into their own hands… but it also represents increased consolidation in the market. Among the end-of-year pushes for M&A activity are Taylor Wessing and Winton & Strawn, joining Ashurst and Perkins Coie in their transatlantic merger quests.
Considering the speed at which the Perkins Coie and Ashurst merger has unfolded, it could signal a shift in decision-making practices within large law firms—toward less centralized, more agile approaches.
New models emerged
McDermott became the first Am Law 50 firm to explore private equity investment in November publicly. Holland & Knight joined a PE consortium, and management services organizations (MSOs) were positioned as succession-planning tools for firms seeking to monetize their back offices.
Practice areas that drove demand
M&A was up 20% through May. IPOs rushed back in September. Government contracts experienced a “perfect storm” of demand in June under the new administration.
Crypto, healthcare PE, and real estate all saw momentum at different points in the year.
What 2025 revealed about the future
If 2025 proved anything, it’s that the legal market doesn’t move in predictable ways. Revenue grew while margins tightened. Firms spent heavily on talent but still lost people. Office mandates spread even as partners pushed back. AI promised efficiency and sometimes delivered it, but also created expensive mistakes along the way.
Paying attention to market trends matters. You need to know what’s happening in your practice area, where firms are investing, and what clients are demanding. But building your career around trying to predict what comes next, or constantly bending to accommodate whatever direction the market swings, leaves you reactive instead of intentional.
What works better is getting clear about what you actually want: the kind of practice you want to build, how you want to work, and what matters beyond the billables. The right firm isn’t the one making the biggest market predictions. It’s the one whose direction already aligns with yours.
Want to talk about what 2025 meant for your practice and where you’re headed in 2026? Let’s schedule a conversation.
