Results from our annual Managing Partner Survey can sometimes feel contradictory—reports of strong growth and an optimistic outlook, while costs were up and revenues were down?—but overall, if 2024 felt like a tough year for your firm, you weren't alone.

The past year has seen a surge in revenue for top-tier Big Law firms, with some seeing double-digit profit growth, and surging demand along with significant billing rate hikes. The good times at the top have also led to an accelerating battle for top talent, with growing price tags and shifting tactics (think adding nonequity tiers, stretching the pay spread, or switching to "black box" comp models).

However, to what extent the midsize market is seeing or feeling the effects of those trends remains to be seen.

Twenty-eight managing partners took part in the New Jersey Managing Partner Survey, with nearly 80% hailing from law firms that have 200 attorneys or fewer. The majority of participating law firms would best be described as full service.

According to the results, managing partners reported strong grow over the past year, with 34.6% saying they grew somewhat and 19% saying they saw significant growth. Overall, the growth was about on par with the prior year, when 44% grew slightly and 17% said they grew significantly. For this year's survey, nearly 39% of firm leaders reported staying the same size, which was up from 32% saying their firm stayed the same size in our 2023 survey.

However, digging into the specifics shows that firms mostly reported a tougher year this year as compared with 2023.

When it comes to financials, 66% of the firms said they saw an increase in revenue, which is down nearly 20 percentage points from the 85% reporting the same last year. However, a larger percentage of firms also reported revenue decreases last year—12% in our 2023 survey—compared with slightly less than 6% reporting their revenue shrunk this year.

The number of firms reporting revenue per lawyer increases also dropped 15 percentage points over last year—from 61% reporting growing this year, compared with 76% reporting the same last year. And the number of firms reporting decreasing RPL also rose slightly this year, to now nearly 17% from 12% in 2023.

Costs, which have been rising for firms of all sizes, were clearly a factor for many law firms. Although 78% reported seeing costs increase in 2024—82% reported the same last year—no firms reported seeing a decrease this year. Last year 3% of respondents reported that their costs had decreased, while 15% also reported that their costs had stayed the same. This year less than 6% said costs remained the same.

All told, only 44% of firms said they saw an increase in net profits this year. That's a significant drop from the 75% who reported seeing new profit gains in 2023. As for a decrease, 22% of firm leaders said they saw a decrease in net profits this year, compared with 15% saying as much last year.

With that in mind, it may be little surprise that more firm leaders reported layoffs in 2024 than in 2023.

According to the 2023 survey, only one respondent said the firm had made any cuts. The respondent indicated it had laid off only attorneys, and fewer than 5% of the total employees were let go.

But in this year's survey, nearly 54% of respondents—or 14 firm leaders—reported laying off both staff and attorneys. An additional one firm said it laid off only attorneys, and two firms said they laid off only staff. Nearly 35% said they did not fire any workers over the past year, compared with 97% reporting no layoffs last year.

Zooming out to take a look at the survey results from leaders across the country, Garden State firms reported more layoffs as well. When viewing results from all 147 firm leaders from across the country who took the survey, 46% said they had fired attorneys and staff, and 41% said neither had been let go.

The past year was similarly down for new office openings, and more firm leaders saying they were planning to close an office than they were last year at this time.

In the 2023 survey, fewer than 3% of firm leaders said they planned to close an office, while this year 13.6% say they plan to do so in the coming year. Fewer firms are also interested in reducing office space this year compared with last year (23% in 2023 compared with 18% in 2024), but about the same percentage of firm leaders (73%) say they plan to keep their footprint the same in the coming year.

Firm leaders also reported that it has been more of a hassle to get bills paid this year. In last year's survey, 44% said the bills were paid without much issue. This year that number is down 15 percentage points to 29%.

When it comes to retaining profitability, raising rates was key. Nearly 94% cited raising billing rates as a way to maintain profitability. That's up from nearly 89% who said the same thing last year. Half also cited switching to a higher demand practice area.

Reasons for Optimism

However, firm leaders have an optimistic view for next year, with 91% of respondents saying they have no layoffs planned for next year. Of the firms who said they were planning some layoffs, three pointed to the nonequity tier and three pointed to the associate tier, while none said it was eyeing equity partners.

At the national level, 75% of firm leaders said they're not planning any layoffs in the coming year.

Firms also reported stronger hiring for first-year associates in fall 2024 compared with fall 2023, with 52% saying they hired more this year, compared with 26% reporting the same thing for last year.

Although mergers remained stagnant—4.5% of respondents reported executing a merger in the past year, compared with 9% reporting the same last year—interest in mergers is up. In 2023, fewer than 3% of respondents said they were actively seeking mergers, while in this year's survey more than 18% of firms leaders said they were actively in the market for a link-up. Twenty-seven percent said they were not interested in a merger at all this year, which is down from the 41% who said the same last year.

Compare that with the national figures where nearly 48% said they weren't interested in mergers.

When it comes to new offices in the coming year, firm leaders are more optimistic than they were last year, when 29% said they were planning to open a new office. This year 38% said they plan to open a new office.

Practice Areas, Succession and Remote Work

For the second year in a row, commercial litigation remains the top area for potential growth, according to firm leaders, with nearly 41% citing the practice area as an area of the law that will likely see strong growth. Bankruptcy, which was more in the middle of the pack last year, landed in the No. 2 spot, with more than 36% seeing potential growth in the coming year. After that, alternative dispute resolution and white-collar investigations were cited by more than 30% of respondents.

Civil rights and product liability were both cited by fewer than 10%, indicating firm leaders are least enthusiastic about these practice areas in the coming year.

Succession planning has been a major driving force behind mergers and law firm growth in recent years, and it seems law firms are starting to keep a closer eye on the issue in their own shops. This year's survey reported a slight increase in the percentage of respondents with mandatory retirement ages—23.5% this year, compared with 17.6% last year. And only 25% said they didn't have a defined succession plan, compared with nearly 44% last year.

More firms also reported having a formal diversity initiative this year—75% this year compared with 64% last year. And when it comes to remote work, one to two work-from-home days a week is still the most popular model, with between 65% and 61% reporting that as their hybrid model. Six percent said they allowed five days a week remote, while 12% said they allowed zero days remote. That tracks closely with last year.