Aug 26 (Reuters) - Large U.S. law firms had strong financial performance in the first half of 2024, with the highest-grossing firms exceeding other segments of the legal market, analysts at Wells Fargo said on Monday.

Revenue increased an average of 11.4% during the first six months of 2024 compared with the same period last year, driven by billing rate and demand growth, according to data from Wells Fargo's Legal Specialty Group. The group's survey of more than 130 firms included 66 of the 100 highest-grossing U.S. firms.

That's higher than the 4.4% revenue growth in the first half of 2023, when firms faced continued financial challenges after productivity declines.

The new survey data shows the best first half since 2021, Wells Fargo said, as capital markets and M&A activity picked up and work in areas such as litigation, restructuring, antitrust and investment management continued to drive growth.

The top 50 highest-grossing U.S. firms had the strongest revenue growth at 13.8% in the first half of 2024, according to the survey results. The second 50 firms had 7% and the next 100 firms had 8.8% revenue growth. According to The American Lawyer trade publication, the top grossing U.S. law firm in 2023 was Kirkland & Ellis, with $7.2 billion in revenue.

The top 50 firms are "significantly outperforming" the other two segments, mainly due to "a lot more rate growth and a lot better realization," said Owen Burman, a senior consultant at Wells Fargo's Legal Specialty Group.

The overall demand for legal services rose by 3.1%, which Wells Fargo said was similar across the different law firm tiers. Meanwhile, there was 10% standard rate growth for the top 50 firms, compared with 7% for the other two segments.

The survey also found, across firms, an average 1.5% productivity increase, 12.8% inventory growth and 7% expense growth.

The Wells Fargo data echos other recent legal industry reports that have shown positive financial results for 2024.

Survey data released earlier this month from Citigroup's Global Wealth at Work Law Firm Group similarly found 11.4% revenue growth and 2.9% demand growth, 6.9% expense growth and 1.2% headcount growth for the first six months of the year. The group surveyed 192 law firms, including 81 of the 100 highest-grossing U.S. firms.

"Sentiment across our client meetings is very positive about this year," said Gretta Rusanow, head of advisory services for the Citi law firm group.