Law firms in the southeastern United States, including Florida and Georgia, saw higher revenue and demand growth — a trend that runs counter to what law firms have experienced across the U.S. as a whole, according to a Q1 survey by Citi Private Bank's Law Firm Group.

“Q1 was a strong start for southeast firms,” said Citi Private Bank Director David Altuna.

The survey results are based on a sample of 187 firms (75 Am Law 100 firms, 52 Second Hundred firms and 60 niche/boutique firms). The Southeast firms in the survey include 19 firms stretching down the east coast from Virginia (excluding Washington, D.C.) to Florida.

Revenue of southeastern firms grew 5.6%, compared with the national average of 4.5%. Expenses increased 6.4% — on par with the U.S. average of 6.5%.

But the primary drivers of revenue growth and expenses differed from those nationwide.

Nationally, higher costs were driven by associate pay raises. For the southeast, expenses were pushed up by head count growth, which increased by 4%. The national average was just under 2%.

In addition, southeast firms saw demand grow by 1.8% — a departure from firms across the U.S., which saw a decrease in demand of 0.3%. This is notable, said Altuna, because demand growth was a major factor in the success of 2018.

“It's really telling because last year was a strong year from a demand perspective,” he said.

Altuna added that there is a relationship between head count and demand. Firms look to capture growth in demand by expanding into new markets. The expansion means hiring additional lawyers, driving up head count. Southeast firms had higher rates than the national average in both metrics. The question is whether the new expenses will eat up the revenue gains.

Additionally, the report found that regional firms were hurt most by this expansion push. Statewide firms saw the largest decline in demand growth (1.6%) and were among the firms that experienced the most sluggish revenue growth (2%).

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