Law Firms Show Moderate Growth in 2004 According to Leading Economic Survey
The newly released Altman Weil Survey of Law Firm Economics, 2005 edition reports median revenue per lawyer in law firms of all sizes throughout the U.S. at $389,000 in 2004, up 3.8% from the previous year. At the same time overhead per lawyer was up only 1.9%, resulting in an income per lawyer increase of 5.1%.
“2004 revenue growth slightly outpaced the 3.4% increase of the Consumer Price Index, while the expense comparison was more favorable,” notes Altman Weil principal James Cotterman. “This modest industry-wide gain is what we would expect to see in the current slow-growth economy.”
The 2004 trend comparisons were drawn from a super-group of nearly 200 law firms that have participated in the survey over sequential years.
Billing Rates and Billable Hours
The median hourly billing rate for partners with 21 or more years of experience was $295/hour in 2004, representing a 5.4% increase over last year’s reported rate. Four-five year associates billed a median $185/hour, up 2.8% according to the Survey.
Billable hours for partners and associates were virtually unchanged from 2003, according to the Survey. Partners with 21+ years in practice worked a median 1,660 hours, while four-five-year associates reported median hours per year of 1,883.
Compensation
The median total compensation (defined as salary/draw, bonus/distribution in cash, plus benefits/distribution in kind) for all law firm equity partners was $291,000 in 2004, a rise of 6.8%. In contrast non-equity partners saw their total comp increase by only 2.8%. Associate compensation increased by 2.5% overall.
Regional and Practice Variations
The Survey identified significant variations in data by region and practice specialty.
District of Columbia law firms reported the highest median hourly billing rates for partners at $405/hour, while West Virginia reported the lowest rate of $168/hour. The highest hourly rates for associates were also reported in Washington, DC at $275 per hour. The lowest associate rate was $100 per hour in Minnesota.
When it comes to billable hours, practice specialty is a determining factor according to the survey. Among litigation specialties, partners with Workers Comp practices billed a median 2,179 hours in 2004, followed by Product Liability practitioners with 1,957 billable hours. By contrast Trust & Estate partners reported billing just 1,518 hours.
The most highly paid practice specialties for non-litigation partners in law firms in 2004 were Municipal Finance, Securities and Mergers & Acquisitions. In litigation practice, Self-Insured Defense, Securities and Antitrust specialists led with the highest median total compensation numbers. Washington, DC led all other states in median comp for partners and associates.
The Survey
The Survey of Law Firm Economics has been published annually since 1972 by Altman Weil Publications, a subsidiary of Altman Weil, Inc., a legal management consultancy headquartered in suburban Philadelphia. The Survey reports on law firm revenues and expenses, billable hours, overhead, margin, billing rates, compensation, leverage and more. It enables law firms to compare performance data with peer firms in similar size, geographic area and practice categories.
This year’s Survey contains information from 18,478 lawyers from 340 U.S. law firms, including 9,704 partners/shareholders, 7,516 associates, 886 active counsel and 372 staff lawyers. Data was collected in the spring of 2005 and reports 2004 performance.
The Survey can be purchased for $775 from Altman Weil Publications. The Altman Weil Small Law Firm Economic Survey, which contains data from participating firms with one to fifteen lawyers, is available for $425. Orders and inquiries can be made by calling 888-782-7297 toll free or by visiting the firm’s online store at https://store.altmanweil.com.
Altman Weil Publications conducts and publishes numerous surveys of the legal profession including the Managing Partner and Executive Director Survey, the Retirement and Withdrawal Survey for Private Law Firms, the Survey of Compensation Systems in Private Law Firms, and the Annual Paralegal Compensation Survey. For additional information visit our website at www.altmanweil.com.
