New Survey Provides Snapshot of Law Firm Economics Across U.S.

Newtown Square, PA, August  2, 2007 — The newly released Altman Weil Survey of Law Firm Economics, 2007 edition reports on law firm revenue, profitability, compensation, billing rates, billable hours and staffing ratios in law firms across the United States in 2006. 

“Unlike other big firm scorecards, the Survey of Law Firm Economics provides a broad-based look at the economics of the legal profession in the U.S.,” notes Altman Weil principal James Cotterman.   “We try to look a little deeper and provide a comprehensive set of benchmarks for lawyers practicing in law firms of all sizes and in all regions.”
 
Law Firm Financials
Average revenue per lawyer in the law firms surveyed was up 4.3% to $419,826 in 2006.  Law firm expenses were up 2.9%, a little above the 2006 inflation rate of 2.5%, and resulting in per lawyer income up 5.3%.

The median profits per partner (defined as salary/draw, bonus/distribution in cash, plus benefits/distribution in kind) for law firm equity partners was $307,740 in 2006.  Non-equity partners received $200,135 in total compensation.  Median associate compensation was reported at $123,050. 

“In our analysis of the survey data, we see the most profitable firms significantly outperforming the pack, continuing last year’s trend,” says Mr. Cotterman.  “This performance gap is driven primarily by higher billing rates and better leverage along with good realization numbers, but only slightly higher billable hours.”

Billing Rates
Nationwide, the median hourly billing rate for equity partners in law firms was $305/hour in 2006, and $200/hour for associate lawyers.   Washington DC lawyers reported the highest median rates at $455/hour for partners and $295/hour for associates.

Billing rates vary significantly by firm size.   Equity partners in firms with over 150 lawyers charge a median $375/hour, ranging up to $535/hour for the top ten percent of firms in that size category.  In comparison, in firms with 9-20 lawyers, the median hourly rate falls to $250/hour. 

Top billing rates by practice area for non-litigation practices are: Municipal Finance ($395/hour), Securities ($390/hour) and M&A ($375/hour), and for litigation practices: Antitrust ($420/hour), Intellectual Property ($388/hour) and Securities ($370/hour).
 
Billable Hours
The Survey reports that equity partners in law firms billed a median 1,704 hours in 2006.  Associates billed 1,840 hours.  Partners with significant management responsibilities in their firms billed only 10% fewer hours than their non-manager peers.

In firms with over 150 lawyers, equity partners recorded a median 1,735 hours/year and associates billed 1,901 hours.  In the 9-20 lawyer category, partners billed 1,566 hours while associates recorded 1,700 billable hours.

Practice specialty can have a big impact on the hours an attorney puts in each year.   For example, litigation partners with a Workers Comp practice bill a median 2,079 hours/year, while those with a Trusts & Estate practice bill only 1,507 hours.
 
Staffing Ratios
The average ratio of associates to partners in law firms nationwide is .64, i.e., 64 associates for every 100 partners.    The ratio of all lawyers (including non-equity partners, associates, staff lawyers, etc.) to equity partners is 1.32, and rises to 2.01 in firms with over 150 lawyers.

The average paralegal/lawyer ratio in all firms is .25, and is marginally lower at .21 in 150+ lawyer firms.  The ratio of legal secretarial staff to all lawyers is .52. 

The Survey
The Survey of Law Firm Economics has been published annually since 1972 by Altman Weil Publications.  This year’s Survey contains information from 18,243 lawyers from 292 U.S. law firms, including 9,610 partners/shareholders, 7,328 associates, 956 active counsel and 349 staff lawyers.   Data was collected in the spring of 2007 and reports 2006 performance.  For additional information or to purchase a survey, go to www.altmanweil.com/SLFE.

About Altman Weil
Altman Weil Publications is a subsidiary of Altman Weil, Inc., a legal management consultancy headquartered in suburban Philadelphia.   It conducts and publishes numerous surveys of the legal profession including the Law Department Compensation Benchmarking Survey, 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.

Contact Information

James D. Cotterman
Altman Weil, Inc.
(407) 381-2426
jdcotterman@altmanweil.com