Weakening demand combined with rising costs continue to curtail law firm profitability, according to the Peer Monitor Economic Index (PMI), a composite database drawn from domestic U.S., as well as international, firms, which measures the relative health of the legal marketplace. A PMI of 65 or more indicates robust health for the legal market—but during the third quarter of this year, the PMI fell one point, to a reading of 50, its second consecutive quarterly decline.

“Demand for law firm services was down 0.8 percent in the third quarter compared with the same time a year earlier,” says a PMI release. Nearly all practice areas suffered: Demand for litigation work fell 0.8% during the 3rd quarter, and, for the first time in nearly two years, IP litigation suffered a 3.6% drop. Likewise, corporate work fell 1.0%; bankruptcy was down by 2.6% and real estate by 2.7%. Labor/employment law was the only major practice area to improve in this last quarter, rising 2.5%.