Q2 2026 LFFI: Midsize Firm Demand Holds Firm but Technology Expense Growth Diverges from BigLaw

Thomson Reuters' Q2 2026 Law Firm Financial Index (published August 10) shows overall demand growth of 3% in Q2 with billing rates up 7.1% — but demand gains at mid-sized firms in specific practice areas are diverging from BigLaw trends. Intellectual property practices show the clearest divergence: IP demand grew solidly at Second Hundred firms while contracting at Midsize firms — the only practice area in negative territory for the mid-sized segment. Technology and knowledge management spending remains the fastest-growing expense category, up 11.6% year-over-year for the average firm, meaning mid-sized firms are paying a similar technology cost curve to BigLaw without the volume discounts that BigLaw's AI vendor agreements generate. For innovation leads and IT directors at mid-sized firms, the Q2 LFFI data frames the AI investment question concretely: technology spending is accelerating faster than the mid-sized firm average rate advantage, and firms that cannot demonstrate workflow ROI on that investment within the next two to three quarters face a cost structure that will pressure partner compensation.