The article was originally published in Law360 by Emma Cueto, here.
Mid-Law firms have enjoyed strong demand and revenues in the first half of 2026, but concerns about a possible economic downturn, industry consolidation and the potential effect of artificial intelligence have those in the industry questioning if the second half of the year will look the same.
These forces are of particular concern for midsize, midmarket and regional firms, which can find themselves squeezed from both sides.
“Thus far, 2026 is off to a great start for most AmLaw 200 firms, including midsize firms,” Kristin Stark of Fairfax Associates told Law360 Pulse by email. However, she added, many midsize firms are also under pressure.
At the midpoint of 2026, those in the industry do see plenty of opportunity for Mid-Law, including the potential to pick off some business from BigLaw as rate increases drive client churn.
The numbers for the first quarter of the year showed firms’ revenue up by over 13%, outpacing the growth of expenses and billing rates up by 11.4%. While numbers were better for the largest firms than for those further down in the rankings, the firms that fell outside the 100 most profitable firms in the country also had a strong start to the year, something industry observers say has only continued.
“For many firms, demand is above 2025 levels — a strong pipeline of work, and solid collections year to date,” Stark said. “Rate growth has also been strong, and many midsize firms are looking at a very solid financial year in 2026, assuming these trends hold.”
However, the outlook is not uniformly rosy. Michael Rynowecer of BTI Consulting Group noted that the industry’s overall success has not been evenly distributed, and that there are plenty of Mid-Law firms that are in a more precarious position than others.
“Some firms decided a few years ago they wanted to be more aggressive, to bring in laterals, to invest in business development, invest in clients service — to invest in a model that looks a bit more like BigLaw than midsize law,” he said. Other firms, he said, have not made similar investments, making them more vulnerable.
According to consultant Dan Safran, firms are not taking for granted that trends will hold. The economy is always a concern, he said, as is the fact that collections are down, with some clients waiting 60 or even 90 days before paying, increasing the chance that work will be marked down or written off.
Rynowecer said that more conservatively managed firms in particular are slowing down lateral hiring and scaling back on certain marketing expenditures. “It’s not just, ‘Hey, we’re looking for warning signs,'” he said. “Firms are … moving towards a preparedness mode.”
Mid-Law firms in particular are also operating in an environment where the gap in profitability between the large and midsize firms is widening, “creating a growing compensation gap [and] strong and increasing headwinds to attract and retain” top talent, according to Kent Zimmermann at The Zeughauser Group.
This dynamic has helped fuel consolidation in the industry, with many firms exploring potential merger options. About 18 mergers involving Mid-Law firms were announced in the first half of 2026, with the largest being the combination of Spencer Fane LLP — one of a handful of “super midmarket” firms that have significantly scaled up their headcount and geographic reach while still primarily serving midmarket clients — and 75-attorney Conner & Winters LLP.
Uncertainty related to AI is also on firms’ minds when looking ahead to the rest of 2026.
“As a midsize firm, we are not immune to the demands on law firms from their clients to see the impact of AI on their bills, and to be identifying certain work streams that can be packaged and price fixed,” said Steven M. Cooperman, managing partner of New York firm Morrison Cohen LLP. “Clients are looking to decrease volatility in pricing and are therefore looking for law firms to partner with them on pricing models that work for everyone.”
Morrison Cohen is not alone. “In 2026, the question is no longer whether midsize firms are piloting AI — it is whether and how quickly they can redesign workflows, staffing, supervision, knowledge management and pricing around AI,” Stark said.
Once again, she noted, midsize firms are stuck in the middle: big enough that they need to invest in AI, but not so large that they can easily absorb the cost.
Safran said that many firms still struggle to determine the best way to deploy AI and how to measure the return on that investment. Many midsize and large firms, he said, have spent big on AI without thinking about the specific uses that can make the firm more efficient or how to embed the technology into the business.
“If a firm spent $1 million [on AI technology], now they need to bring in another $3-4 million in revenue to break even on those investments,” he said, adding, “You have to point to and define and measure what the outcomes are going to be, instead of just throwing money at technology and hoping for an ROI.”
Looking ahead, industry observers said that it remains to be seen if the concerns are warranted, and the second half of 2026 will prove rockier than the first. Despite the potential difficulties, Rynowecer said, there are still opportunities for those in the middle.
“The largest clients are the most open to hiring midsize firms that I’ve seen in 30 years,” he said. “Rates may play a role, but I think the bigger issue is client service. … When they’re not getting great client service, they tend to be more open.”
Cooperman said that Morrison Cohen is also focused on ways to maintain and improve client service and is in a good position; revenue is up more than 10% compared to 2025 at this time, he said. However, the firm is still keeping an eye on trends from AI to the rise of private equity investment in the legal sector.
“We are always keeping our ear to the ground,” he said.