US law firm revenues rise 12.4% in first half of 2026

US law firm revenues increased by 12.4% in the first half of 2026, according to data from Wells Fargo’s Legal Specialty Group covering more than 140 firms. This growth represents an acceleration from the 11.2% increase recorded during the same period in 2025. Demand, measured by lawyer hours worked, rose by 4.8%, driven significantly by the artificial intelligence investment cycle, including advisory work for data center development and capital raising.

Key practice areas driving lateral hiring and revenue include Mergers and Acquisitions (M&A), private equity, finance, and real estate. The resurgence in M&A is supported by increased sponsor activity and improving financing markets. In the finance sector, demand is being fueled by private credit, direct lending, and acquisition finance. Real estate practices are also seeing growth due to investments in digital infrastructure.

Despite the revenue growth, firms face challenges with cash flow. Firm inventories rose 17.7%, while collection cycles slowed by 5%, indicating that firms are taking longer to convert billed work into cash. While lawyer headcount grew by 2.9%, productivity rose by 1.8%, reversing a decline seen in the first half of 2025.