Key Takeaways
- Legal talent movement surged in 2025, driven by record law firm mergers, accelerated AI adoption, and growing interest in outside investment in BigLaw.
- Law firm combinations increased 8.6% year over year, with 2,261 lawyers joining new firms from mergers — a 75% jump from 2024 (SurePoint data).
- Lateral hiring rose 15% overall, with the highest movement in Litigation, Corporate, Banking, Real Estate, and Bankruptcy practices.
- Firms expanded scale to manage rising legal technology costs, increase practice depth, and improve service delivery.
- Increased focus on managed services organizations (MSOs) reflects firms’ search for new capital models to fund innovation and recruitment.
- Despite 11.3% revenue growth through Q3 2025, real demand increased only 1.9%, with most revenue gains driven by 9.6% billing rate increases.
- AI adoption became a defining legal‑industry trend, changing workflows and increasing the competitive advantage of tech‑fluent lawyers.
- The article predicts more jurisdictions will allow alternative legal service models and loosen restrictions on non‑lawyer ownership.
- Rate pressure is expected to push more lawyers from top‑tier firms to mid‑market platforms in 2026.
- Attorneys who integrate AI and legal technology skills into their practice are projected to have elevated career and compensation opportunities.
- The legal sector is positioned for continued market consolidation, regulatory change, AI‑driven transformation, and lateral hiring momentum throughout 2026.
January 08, 2026 - 2025 was one of the most robust years for legal talent movement on record. Lateral move volume at all levels and all roles was epic but not surprising given the forces that developed during the year. In a year when firm combinations increased, Artificial Intelligence took hold, and a real prospect of non-lawyer investment in BigLaw entered the conversation, partners, associates and firms sought to position themselves for potential transformation in legal services.
Trending in 2025
Notable trends in firm combinations included more mergers of larger firms, transatlantic tie-ups and announcement of intentions earlier in the process. Firms with large head counts joined forces with even larger firms to gain access to work, clients, new geographies and economies of scale.
While mergers are up approximately 10%, according to data from SurePoint, lawyers who moved into a larger firm in a combination increased by more than 75% from 2024. (SurePoint Technologies, which acquired Leopard Solutions in 2024, provides competitive, market, and business intelligence data for the legal industry. Data is from a webinar in November 2025, "Sate of Lateral Recruiting: Trends, Challenges, And the Road Ahead.")
Through Oct. 31, 2025, 2,261 lawyers joined new firms as the result of a combination, compared to 1,273 in 2024 over the same period.
In 2024, through Oct. 31, there were 46 combinations of firms. During the same period in 2025, there were 50 firm combinations, representing 8.6% growth. One conclusion to draw for the numbers is that there were combinations of much larger firms than in 2024.
Firms on both sides of the Atlantic continued to seek access to vibrant global legal markets, as well as greater revenue and higher profits offered through combination. Notably, firms have been more willing to confirm and even officially announce mergers earlier in discussions. One reason for earlier announcement of intentions is to enhance retention of rainmakers and critical talent post-transaction. Successful combinations rely on maintaining the practice economics and geographic footprint underpinning the combination.
Lateral movement was at extraordinary levels, reflecting widespread opportunities for candidates and firms. According to SurePoint, overall movement of lawyers between firms increased approximately 15%. Partners and associates in Litigation and Corporate practices continued to lead total volume, with increased movement of 10% and 17%, respectively. Banking, Real Estate and Bankruptcy led year-over-year growth with increases near or above 30%.
Fortification and retrenchment
2025 was a year of fortification and retrenchment for both firms and lawyers. Firms continued to spread the costs for technology and talent across larger numbers of fee earners by adding practice area depth or providing additional services for their best clients.
Attorneys continued to look for platforms that appropriately value total contributions of an individual or team, as well as allow for control in client service. The ability to have a suite of services for top clients, at the right price point with as little friction as possible, is as important as compensation to many high performers.
The costs of talent and technology are significant and increasing, which brought outside investment and private capital into the conversation in a very serious way. In past years, experiments with alternative structures for legal businesses remained on the fringes. This year, talk of loosening regulations around outside ownership and investment took center stage in conferences and among leadership teams.
The most recent push has been the managed services organization, as a means to unlock value for partners and senior leaders. MSOs also appeal to firms as a means to raise money for technology upgrades and innovation, compete for the best talent, and facilitate succession planning.
Increased demand
The legal industry appears to have had a strong 2025, particularly when measured by revenue growth which was ahead of 2024 by 11.3% at the close of Q3. A closer look reveals that demand growth was 1.9%, with the vast majority of revenue growth driven by rate rises of 9.6% and early 2025 collection of carry overs from 2024. (2026 Citi Hildebrandt Client Advisory).
Demand for legal services (and clients willing to pay for legal services) is unlikely to decrease in the near term. Increasing volatility, complexity and transformative forces are far more likely to increase the amount of legal advice needed, even if technology alters the way that work is completed.
Artificial Intelligence
AI implementation raised concerns about the effects on multiple pillars of the legal industry, including how AI will affect demand, employment and even who provides legal services. One counter-intuitive view is that sophisticated technology tools will generate more and new types of work that will require continued and increasingly high-level involvement of lawyers.
The ability to do work that previously delivered insufficient ROI for some firms becomes possible when efficiencies driven by AI make that work profitable. Rather than reducing jobs, technology will change the skills lawyers need and will deepen the understanding of law required to advise clients on their legal problems.
Practicing attorneys can no longer delay integrating technology into their workflow. Indeed, AI advances in the coming year will have profound effects on how to practice law and what it means to be a lawyer. Lawyers who skillfully integrate technology into their practice will be most successful.
Questions lawyers can consider to prepare themselves include:
- How does technology change work that only a human can do?
- How do lawyers develop and maintain expertise, judgment and wisdom in a technology-first workflow?
- What does it mean to be a lawyer?
The year ahead
Firms and clients will focus on questions such as:
- What is the best measure of value for legal services?
- Who bears the cost of technology implementation?
- How should the economic benefits of efficiencies be shared?
- Who, outside counsel or in-house lawyers, does what types of work and why?
2026 will see a continuation of efforts to keep pace with a transforming legal market. New technology, regulatory loosening, alternative sources of capital, and evolving client needs will drive the continued movement of both talent and capital in the legal industry.
Firms will begin to shed lawyers who joined in prior combinations. Only a very small percentage of firms retain 100% of the fee-earners three years post-combination. (SurePoint). On the other hand, combinations will continue to attract talent for multiple reasons, including excitement about new market entrants, access to new clients, new practices to support existing clients, and opportunity to add value to a new venture. There is no indication right now that the forces driving law firm combinations in the past year will abate in 2026.
Lateral movement will continue as lawyers respond to clients' concerns over increasing rates. Individuals and groups in practice areas that have not been able to keep pace with hourly rates that have climbed toward $3,000 will depart top-tier firms for platforms with less rate pressure.
Outside investment and AI will continue to drive discussions about restructuring and new models for completing legal work. Costs and fees associated with adoption of new technology and models remain uncertain given mixed signals about the extent to which firms or clients harvest the economic benefits of efficiency gains.
My predictions for 2026 include the following:
- More jurisdictions will open the doors to alternative delivery of legal services and outside investment in law firms as regulators address the interplay of ABA Model Rule 5.4, prohibiting outside investment, and consumer protection.
- A Big Law firm will announce an outside investor in the operations of the firm.
- Robust lateral movement will continue as firms compete for the best talent to serve clients.
- Rate pressure continues to drive moves to mid-market firms.
- Lawyers with AI and technology fluency gain a significant advantage in receiving full value for their contributions.
Volatility and complexity increased in 2025! The legal industry is at a moment when rapid advances and transformative forces will drive increasing change in the year ahead.
