Halloween is around the corner, and the economy is doing its best to keep everyone on edge. Inflation hasn’t fully let go. Interest rates remain a moving target. Clients are watching their spending, and every headline seems to carry a new source of geopolitical or regulatory uncertainty.
For most of the legal profession, the numbers look strong right now. But strong numbers and a secure future are not the same thing. Where you stand in this uncertain market depends on where you are in your career. Are you planning to retire in the next five to ten years? Are you thinking about a lateral partner move? Are you confident your firm is positioned for what comes next?
These are the questions senior partners should be asking now, while they still have leverage, and not after the market turns.
The Legal Market Looks Strong. Look Closer.
The legal profession has long had a reputation for weathering economic storms, and the past two years have reinforced it. According to the 2026 Report on the State of the US Legal Market, the average law firm grew profits by 13% in 2025, demand posted its strongest growth since the Global Financial Crisis, and worked rates climbed a record 7.3%.
The momentum carried into 2026. The Thomson Reuters Institute’s Law Firm Financial Index rose sharply in the second quarter, with demand on pace to make 2026 the strongest year for legal work since the 2021 rebound
That’s the good news. Here’s why it shouldn’t make anyone complacent.
The Warning Signs Beneath the Record Numbers
The same Thomson Reuters and Georgetown Law report that documented record profits also delivered a clear warning. The report found that much of the demand surge was driven by instability, including trade disputes, regulatory upheaval, and geopolitical tension, rather than by underlying economic health.
Buyers are getting cautious. Many general counsel signaled they are considering meaningful spending cutbacks, with the report’s measure of anticipated legal spending falling to levels last seen during the pandemic. And the report noted that today’s mix of booming demand, rising expenses, and widespread optimism closely resembles the conditions that came before the industry downturns of 2007 and 2021.
Costs are climbing too. Direct expenses and overhead both rose quickly in the second quarter of 2026, with technology and knowledge management spending among the fastest-growing categories. And roughly 90% of legal dollars still move through hourly billing, even as firms invest heavily in AI that will change how legal work gets done.
None of this means a downturn is imminent. It does mean the partners who plan now will have far more options than those who wait for a signal that the market has shifted.
Where the Work Is Going, and What It Means for Equity Partners
One of the most important trends in the current data has nothing to do with inflation. It has to do with who is doing the work.
In the second quarter of 2026, associate demand rose 4.3% and non-equity partner demand rose 6.0%, while equity partner demand fell 1.2%. Thomson Reuters reported that the ratio of non-equity partner hours to equity partner hours reached its highest point since late 2018.
For equity partners, the message is clear. Your value to the firm is increasingly defined by the client relationships you hold, the business you originate, and the strategy you set, not by your own billable hours. That is a strength if your book is solid and well-protected. It is a vulnerability if your relationships are concentrated, undocumented, or dependent on you alone.
The market is also splitting by platform. Productivity at Am Law 100 and Second Hundred firms has been improving, while midsize-firm productivity has contracted. That does not mean midsize-firm demand is declining: clients have also been shifting work away from the most expensive firms toward lower-cost alternatives. The platform you practice on matters more than it did two years ago.
If You Plan to Retire in the Next Five to Ten Years
Are you well positioned to step back and enjoy retirement on your timeline? Are you leveraging your niche to realize the retirement you have worked toward for decades?
Five to ten years sounds like a long runway. It isn’t. Transitioning client relationships takes years, not months. Clients need time to build trust with the partners who will inherit their matters, and firms need time to plan for the revenue that walks out the door when a senior partner retires.
A strong market is the best time to have this conversation. Firms are profitable and investing in growth, which gives you more leverage to negotiate a succession arrangement that protects your clients, your legacy, and your financial interests. Wait until the market softens, and that leverage shrinks.
Start by asking what would happen to your clients if you stepped away tomorrow. If the answer is unclear, your succession plan isn’t finished.
If You Are Considering a Lateral Partner Move
For partners thinking about a lateral move, the current market offers real opportunity, along with real reasons to be selective.
Demand is strong and firms are still investing, so portable books of business remain in high demand. But with segments diverging and clients more price-conscious, the right platform depends on your practice, your clients, and your rates. A firm whose pricing pushes your clients away is not an upgrade, no matter how impressive its brand.
Evaluate the platform the way your clients would. Can it support your practice at a price point your clients will accept? Does it have the depth to absorb a slowdown? Is it building toward something, or simply riding the current cycle?
Protecting Your Book of Business in Any Climate
Whatever stage you are in, your book of business is your most valuable asset. What are you doing to protect it?
Protection starts with diversification. A practice that depends on one or two anchor clients is exposed when budgets tighten, and the data suggests general counsel are preparing to do just that. Institutionalizing relationships matters too. Bring other partners and senior associates into key client matters so that relationships are durable rather than personal.
Finally, stay close to your clients’ business. When GCs are under pressure to justify spending, the lawyers who understand their clients’ priorities, offer predictable pricing, and deliver measurable value are the ones who keep the work.
Are You Undervaluing Your Worth?
Many partners have no clear picture of what their practice is worth in the current market. They know their compensation. They don’t know what another platform would pay for their book, or how their value would change by joining forces with a larger firm or bringing a group with them.
That gap is expensive. Partners who have not evaluated their market position may overlook important options involving compensation, succession terms, and the resources available to grow their practice.
Ask yourself the questions that matter. What keeps you up at night about your practice? When will you be able to step back and enjoy the life you have worked for? And do you have a plan to get there, or just a hope?
“Planning the next stage of your legal career requires understanding your options before circumstances limit them. Whether you’re considering a lateral move, succession, or the future of your firm, the decisions you make today can shape your financial future and professional legacy.”
– Shari Davidson
Frequently Asked Questions
Is the legal industry recession-proof?
No industry is fully recession-proof, but legal services have historically held up better than many sectors. Recent Thomson Reuters data shows record profits and strong demand, alongside warning signs including declining general counsel spending expectations and patterns that resemble the periods before the 2007 and 2021 downturns.
How does inflation affect law firm partners?
Inflation drives up firm costs, including talent and technology, and puts pressure on client budgets. Firms have offset this largely through rate increases, but that strategy depends on clients continuing to accept higher rates.
When should a partner start succession planning?
Ideally, partners should begin planning several years before retirement, allowing sufficient time to develop successors, transition client relationships, and evaluate their financial options.
Is now a good time for a lateral partner move?
Strong demand and continued firm investment make the current market favorable for partners with portable books of business. The key is choosing a platform whose pricing, depth, and strategy fit your clients and your long-term goals.
Plan While the Market Is in Your Favor
Fear is not a strategy, and neither is waiting. The legal market is strong today, but the data makes clear that conditions can change quickly. The partners who come through the next cycle in the best position will be the ones who used this window to protect their book, plan their succession, and understand exactly what their practice is worth.
If economic uncertainty has you questioning the value of your practice, the security of your book of business, or the timing of your next move, On Balance Search Consultants can help you evaluate your options while you’re still in a position of strength.
For a deeper look at the decisions that shape an attorney’s career, request a complimentary copy of The Arc of an Attorney’s Career. DM CLARITY on LinkedIn or email Shari@OnBalanceSearch.com.
Who’s Driving Your Career?™
Shari@OnBalanceSearch.com | OnBalanceSearch.com | 516-731-3400
All conversations are confidential.
About On Balance Search Consultants
On Balance Search Consultants provides market intelligence and strategic advisory services to law firms and experienced attorneys. Shari Davidson, President, advises on lateral partner transitions, law firm growth, leadership succession, and attorney career strategy. Working with both firms and attorneys, On Balance helps align long-term objectives with the right platform, leadership structure, and growth strategy.
Contact: OnBalanceSearch.com | 516-731-3400
Disclaimer: This content is provided for informational and educational purposes only and does not constitute legal advice. Readers should consult qualified legal counsel regarding their specific circumstances and applicable legal requirements.
Sources
Thomson Reuters Institute and Georgetown Law Center on Ethics and the Legal Profession, “2026 Report on the State of the US Legal Market: Peak prosperity and the fault lines below.” https://www.thomsonreuters.com/en/institute/reports/state-of-the-us-legal-market-2026
Thomson Reuters Institute, “Q2 2026 LFFI: A heavier load, yet a faster crossing.” https://www.thomsonreuters.com/en/institute/reports/lffi-q2-2026-heavy-load-picking-up-speed
Thomson Reuters Institute, “Q2 2026 LFFI analysis: The rising costs lurking beneath law firm momentum.” https://www.thomsonreuters.com/en/institute/articles/q2-2026-lffi-analysis-rising-costs
