By all accounts, the U.S. economy is roaring ahead, with hiring and wages up and the unemployment rate steady at a low 3.7 percent. If businesses are healthy, so too must be the law firms that represent them. After all, a rising tide lifts all boats — right?

It may not be as simple as that. An analysis of how Am Law 200 firms have performed during each of the past four economic cycles shows that every subsequent recession has had an increasingly weighty impact on law firm revenue and hiring growth.

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So what do we take away from this? For one, it means law firms are getting less and less out of economic expansions. That's probably in part because the overall economy hasn't been growing quite as fast as in prior cycles, which might explain some of the slower hiring. But that doesn't account for the entire picture — especially when it comes to revenue per lawyer (RPL).

RPL is a good proxy for billing rates. What this tells us is that lawyers are having a harder time raising prices on their clients. Given all that's been written about increasing competition from alternative service providers, the growth of in-house teams, and greater client demands, that may not be surprising. But the point is that this isn't just part of the cycle; it's a gradual shift that is having lasting effects.

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Methodology: The data reflect cumulative RPL and law firm headcount growth for each cycle among Am Law 200 firms who responded to an ALM poll in the given years. For each period, data were drawn from responses from firms who responded every year during the cycle.

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