Expense Growth Is Outpacing Revenue in a Growing Share of Firms

Across the Wells Fargo, Citi, and Thomson Reuters datasets, a consistent picture emerges: total expenses are growing at 9.6–10.7%, eating into margins even as revenue grows 11–12%. The fastest-growing expense categories are technology (+11.6% per Thomson Reuters), direct lawyer compensation (+8.2% in 2025), and overhead support costs (+6%). Equity partner headcount in the Am Law 100 declined 0.5% while income partner headcount grew 6% — a leverage shift that reduces per-partner compensation pressure but adds to the salaried cost base. For managing partners, the H2 challenge is clear: if collections do not improve and expense growth is not contained, margin expansion will stall despite continued top-line growth. AI investment, while strategically necessary, is accelerating the cost side of the equation before productivity gains are measurable at scale.