Major U.S. law firms are reporting strong financial growth in 2025, driven largely by surging billing rates that are helping to offset rising expenses tied to higher compensation and new technology investments. A survey by Wells Fargo’s Legal Specialty Group found that revenues rose by 11.3% in the first half of the year compared with 2024, while profits per equity partner climbed 13.7%. The increase was fueled by a 9.2% rise in billing rates across more than 130 firms surveyed.
Consultants said the rapid adoption of generative artificial intelligence has been a key factor in the rising cost structures at big firms. Overhead expenses excluding lawyer pay increased 8.6% in the first half of 2025, reflecting heavy spending on AI platforms and other technology. Yet experts cautioned that firms are not cutting staff in response, meaning they are paying both for traditional lawyer headcount and for AI systems that may eventually streamline workloads. “In the meantime, you have both the associates and the AI, and there aren’t any expense savings right now—it’s just expenses,” said Owen Burman, a managing director at Wells Fargo.
Top partners at elite firms are commanding record rates, with lawyers at Milbank, Quinn Emanuel, and Susman Godfrey now billing more than $3,000 per hour. Milbank’s Neal Katyal, a former acting U.S. solicitor general, reportedly charges $3,250 an hour. Rising attorney and staff compensation, coupled with higher office and insurance costs, have also added to firms’ financial burdens. Kristin Stark of Fairfax Associates said, “Expenses are up across the board,” underscoring the pressure on firms to maintain aggressive rate hikes.
The rise of generative AI continues to spark debate over the future of the billable hour model. Some consultants argue that AI’s ability to quickly generate legal documents could push firms toward project-based or value billing, though past technological shifts such as e-discovery and online legal research did not ultimately disrupt billing practices. “It didn’t happen before, so we’ll have to wait and see,” said industry analyst Peter Zeughauser. Others warn that AI remains a “looming unknown” that could transform legal economics more abruptly than prior innovations.
Despite the uncertainty, the legal profession continues to expand. Law schools saw an 18% increase in applicants this year, while the latest graduating class recorded the highest employment rate ever, with 93.4% securing jobs within 10 months of graduation. At the same time, major litigation battles continue to generate enormous legal fees, with Cravath and other firms seeking more than $205 million in fees from Epic Games’ antitrust victory against Google. Even as costs mount and AI reshapes the landscape, the U.S. legal industry is showing resilience, buoyed by client demand and escalating rates at the top end of the market.
