As 2025 unfolded, a widening performance gap emerged among mid-size law firms. While many benefited from strong demand and rising rates, outcomes diverged sharply beneath the surface. Some firms converted growth into durable profitability and operational momentum; others struggled with margin erosion, execution bottlenecks, and leadership strain. From our vantage point – working closely with firm leaders through executive searches, advisory engagements, and ongoing conversations across the market – we saw the same patterns repeatedly.
The firms pulling ahead were not pursuing radically different strategies; they were running their firms with greater discipline, clearer ownership, and more intentional investment. The trends that follow reflect where those differences became most visible over the course of 2025.
Trend 1: “Mid-size” itself has expanded – and fragmented
There is now clear inflation in what we call a “mid-size” law firm. A decade ago, 75 to 250 lawyers defined the category. Today, many 150-to-400-lawyer general practice firms operate at a scale – and with a sophistication – that would once have classified them as Big Law. Meanwhile, general practice firms in the 75-to-125 range often lack the infrastructure to compete with larger mid-size firms for complex work, top laterals, and even associates.
Many mid-size firms, regardless of size, have been, and are continuing to, rapidly and significantly grow in order to have the revenue necessary to support the type of infrastructure of more profitable law firms. Expansion alone, however, does not always translate into success. Firms that added offices and headcount without a clear practice rationale, integration plan, or leadership model often stalled and, in some cases, diluted performance. In contrast, firms that doubled down on markets where they already had a reputation and momentum – for example, industry clusters, litigation hubs, regulatory centers – strengthened profitability and identity.
At the same time, some smaller firms are emerging as high-performing niche players, focusing on specialized industries or practice areas with revenue per lawyer and profits per equity partner rivaling Am Law 100 averages. These firms are redefining success on the smaller end of the spectrum – prioritizing depth over breadth and focus over footprint.
Within this widening band, divergence continues to grow. Firms above roughly 150 lawyers are expanding technology, data, and business-professional infrastructure not to mimic Big Law, but to meet client expectations and attract talent seeking many of the benefits of scale without its bureaucracy.
Trend 2: Demand stayed strong, but operational discipline separated performance
What we’ve seen throughout 2025 is that mid-size firms posted steady demand growth, with worked rates rising and clients willing to pay across both litigation and transactional practices. Yet, despite higher revenues, profit margins varied widely. Firms that failed to control costs, scope matters, leverage appropriately, and collect efficiently saw some, if not all, of those gains dissipate.
Client sophistication is accelerating this divide. Procurement scrutiny, pricing transparency, and post-matter analysis are no longer limited to large institutional clients; they are becoming standard expectations across the middle market. Firms increasingly needed to explain not just outcomes, but how matters were staffed, managed, and delivered efficiently.
The more our clients strengthened their financial operations – assigning clear ownership of pricing, billing, collections, and staffing decisions – the better they performed. We advise clients to use dashboards to track realization, leverage, turnaround times, and write-offs at the practice level. In this regard, expense growth is increasingly treated as an investment decision requiring a defined return, not an entitlement.
Trend 3: AI and data tools moved from promise to productivity – but unevenly
As recently as 2023, most firms were largely only studying AI. Committees proliferated, and random pilots were initiated. Most COOs and managing partners were content to be followers. By mid-2025, nearly every firm claimed to be using generative AI, but measurable productivity gains remained concentrated among firms that redesigned workflows around it rather than layering tools onto existing habits.
Client pressure played a role. As clients became more attuned to efficiency and value delivery, firms faced growing expectations to demonstrate how technology improved margins, reduced cycle times, or enhanced accuracy. The same uneven pattern appeared with analytics. Only a minority of firms turned dashboards into daily management tools rather than annual reports.
What we increasingly advise – and see succeeding – is a shift away from committees and lawyer governance toward assigning a clear business-side owner, often a Director of Practice Innovation or Chief Practice Officer, responsible for AI pilots, policy, training, and measurement. The focus has narrowed to repeatable workflows – drafting, diligence, pricing, matter management – where success can be quantified in hours saved, error rates reduced, and margins improved.
Importantly, firms that paired AI adoption with intentional associate training and workflow redesign saw stronger results than those that viewed AI primarily as a headcount reducer. The objective is not fewer lawyers, but better leverage and more predictable economics at the matter level.
Looking Ahead: Why This Matters as Firms Enter 2026
Strong demand can mask structural weaknesses for only so long. Clients are asking for greater discipline and transparency, talent is responding to clarity and capable leadership, and partners are balancing growth ambitions with rising complexity. The firms best positioned for the next phase are those taking a measured, deliberate approach to professionalization – clarifying leadership roles, investing with purpose, and aligning lawyers and business professionals around shared performance goals.
For many firms, the opportunity ahead is not to become something bigger, but to become more focused, more resilient, and better equipped to run the firm as the sophisticated enterprise it already is.
Questions Firm Leaders May Wish to Consider as They Plan for 2026
- Do we have clear ownership and accountability for the firm’s business operations – including pricing, staffing, technology adoption, and performance management – or are these responsibilities still diffused across committees or different business verticals?
- Are our leadership roles and business-professional positions designed with the authority, scope, and support required to drive firmwide outcomes, not just manage operations?
- Are we using data – financial, operational, and talent-related – as an active management tool, or primarily as retrospective reporting?
- Do our current talent models give us the flexibility and capacity to respond to growth, change, and strategic initiatives without overcommitting fixed resources?
- Are we investing in our people and infrastructure with a defined return in mind, and do we have the mechanisms in place to measure whether those investments are delivering?
