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Law firms in Pennsylvania outpaced most other regions in demand growth in 2017, as the whole industry fed off a stronger fourth quarter to finish ahead of the previous year, a recent report from Citi Private Bank said.

Pennsylvania law firms surveyed saw revenue increase by 6.4 percent in 2017, which was better than the industrywide average of 4.5 percent, according to Brad Winton, a private banker and senior vice president in Citi Private Bank's law firm group. But expense growth in Pennsylvania also outpaced the rest of the industry.

Demand was up 4.4 percent, which was the second highest increase among all regions surveyed, Winton said.

Industrywide, demand was up just 0.7 percent last year, the bank found. But even that was an improvement over the first nine months of 2016, when demand was down 0.2 percent. It's also better than 2016, when demand grew just 0.1 percent industrywide.

The demand numbers for Pennsylvania showed continuation of a trend that was also reflected in Citi's report for the first three quarters of 2017, which said that demand, rather than rate increases, was driving revenue growth at Pennsylvania firms. Pennsylvania showed rate increases of 2 percent in the fourth quarter, Winton said.

Pennsylvania firms outpaced all other regions in productivity, which was up 1.8 percent for the region. Nationally, productivity was down 0.2 percent industrywide, as lawyer demand growth of 1.7 percent lagged slightly behind head count growth of 1.9 percent.

Head count growth at Pennsylvania firms was up 3.3 percent, which was the second highest among all regions. That may not be surprising, in a year where several firms announced significant mergers or lateral group hires. But equity partner head count was actually down 1.3 percent.

Law firms in Pennsylvania saw expenses grow by 7.4 percent in 2017. Compensation expenses were up 8.5 percent, and operating expenses were up 6.6 percent.

Nationally, expense growth was up 4.5 percent for the year, compared to 3.4 percent in 2016. But, like in Pennsylvania, compensation expenses, up 6.5 percent, grew more than operating expenses, which increased by 3.1 percent.

According to John Wilmouth and Gretta Rusanow of Citi Private Bank, the expense changes reflected an increase in the head count of salaried lawyers and the impact of associate salary increases that began to take effect halfway through 2016.

Citi Private Bank's results are based on a sample of 189 firms, including 81 Am Law 100 firms, 53 firms in the second hundred and 55 niche or boutique firms. According to Wilmouth and Rusanow, law firms in the top 50 of the Am Law 100 performed best in 2017, and they tied niche or boutique firms for the greatest demand growth, at 1.7 percent. Law firms in the second hundred of the Am Law 200, however, saw demand decline.

Global and international firms also performed best in terms of revenue and profitability growth, Citi found, with better results than the national and regional firms.