Archive for the ‘Trends’ Category

New legal industry surveys

August 8th, 2013 by Altman Weil

Here’s an update on a few noteworthy surveys that have been released this summer:

Law Firm Billing Rates

“For in-house counsel who want to do some comparison shopping on law firm billing rates, a new analysis from TyMetrix Legal Analytics and CEB shows… average hourly rate in 2012 for partners was $536.47, and for associates it was $370.25…. Partner rates went up 3.1 percent in 2012, compared to a 4 percent increase in 2011. Similarly, average associate rates increased 7.4 percent in 2012, versus 8.5 percent the year before.”

Read it at Corporate Counsel 

General Counsel Compensation:

“After across-the-board declines the previous year, compensation bounced back up in 2012 in every category of GC pay that [Corporate Counsel’s GC Compensation Survey] measures. Average total cash received rose 6.7 percent to $1,853,671, which is the highest figure we’ve seen … since 2000.”

Read it at Corporate Counsel

Law Firm Libraries:

The American Lawyer’s 12th annual Law Librarian Survey finds that, financial uptick not withstanding, the pressure to contain costs continues, clients are even more reluctant to pay for research than they were a year ago, and negotiations with vendors — never exactly a festive occasion — are still often contentious.  Overall, spending on outside vendors has held steady, with responding firms reporting an average 2013 library budget (including staff, print materials, electronic resources, etc.) of $6,194,015, compared to a 2012 average of $6,162,130. As in the past several surveys, increases in online spending were mitigated by cuts to print collections.”

Read it at The American Lawyer

A law firm gets serious about knowledge management

July 16th, 2013 by Altman Weil

Latham & Watkins is rewarding time spent on knowledege management (KM) in its bonus structure, according to The Lawyer, counting an hour spent on KM as equivalent to a billable hour. 

“Since its launch in April 2012, more than 860 KM and thought-leadership projects have started within the firm,” said [Latham’s Global Director of KM, David] Fitch. “That equates to around 50,000 hours contributed of attorney time.”

The range of KM projects Latham’s lawyers are involved in that generates credited hours includes drafting and updating of forms, organisation of precedent and know-how resources, the drafting of client alerts and other thought leadership pieces.”

Read it at The Lawyer

New law school grads

June 20th, 2013 by Altman Weil

NALP has released their latest numbers on employment and starting salaries for new law school graduates.  The data represents the status of the Class of 2012 as of February 15, 2013 (about nine months after graduation).

 

  • Overall employment for 2012 grads is 85.5%, down for the 5th year in a row

  • 64.4% of graduates got a job requiring a JD, the lowest percentage NALP has ever recorded

  • Half of employed graduates found a job in private practice

  • Median law firm starting salary was $90,000, up from $85,000 last year

Read it at NALP

Non-Equity Partnership Trends

March 12th, 2013 by Altman Weil

Since 1999, the Am Law 200 lists have tracked the number of non-equity partners in the 200 highest-grossing law firms in the United States. Between 1999 and 2012 there has been a significant change in those numbers.

In 1999, 65.5% of Am Law 200 firms had non-equity tiers; in 2012, that number had jumped to 84.5%.  Seventeen percent of all partners in two-tier firms were non-equity partners in 1999.  By 2012, 39% of all partners were in a non-equity tier.  Finally, the average number of non-equity partners in a two-tier firm went from 35.5 in 1999 to 108.8 in 2012.

The growth of non-equity partners as a lawyer category has reshaped law firms.  Many argue that the non-equity tier provides an easy way to offer the pride of partnership to associates, to introduce senior lateral hires, to increase billing rates of senior associates and elevate their status in the market — or to park underperforming equity partners.  However, it also builds a seemingly permanent class of high-priced leverage whose average billable hours are below those on either side of them (senior associates and equity partners).

It is critical for two-tiered firms to rethink their strategic intent with non-equity partnerships, including:

  • Analyzing short and long-term impacts on firm profitability
  • Rethinking non-equity compensation
  • Establishing tougher standards for entry and retention in the non-equity tier
  • Regularizing performance evaluations
  • Systematically managing transitions out of the tier

These steps will enable two-tier firms to begin the process of optimizing the productivity and profitability of non-equity partners.

Staffing moves save money, promote efficiency

February 1st, 2013 by Altman Weil

Several recent stories highlight law firms’ ongoing attempts to cut costs and deliver services more efficiently by rethinking their staffing models. 

The AmLaw Daily noted Kaye Scholer’s intention to move 100 back-office jobs, primarily from New York City, to Tallahassee Florida.

“The new operations center should help Kaye Scholer respond to the continuing push by clients to control costs, with Tallahassee’s lower cost of living allowing the firm to save on real estate expenses and staff salaries. [Chief Operating Officer Jeffrey] Hunter also views the move as promoting efficiency: “We think that we can provide timelier and more responsive services to partners and—in turn—their clients by centralizing those services instead of having them scattered across our New York, Washington, D.C., and Los Angeles offices,” he says.”

Read it at The AmLaw Daily

In a similar move in the UK, Magic Circle firm Allen & Overy announced they would relocate 43 US and European staff positions to their back office location in Belfast.

“With low economic growth across many developed markets, we must ensure we are operating in a way that will deliver the cost efficiencies our clients expect of us, so that we may protect the long-term competitiveness of our business,” Wim Dejonghe, the global managing partner for Allen & Overy, said in a statement.”

Read it at The AmLaw Daily 

The Legal Intelligencer reported that Blank Rome is offering buyouts “to its entire legal secretarial pool” as part of a rethinking of its secretarial needs:

“The reduction in legal secretaries is part of the firm’s overall effort to move into a more “efficient and flexible” service delivery model that better represents the fact that its younger attorneys are not utilizing secretaries the way more senior attorneys do.”

Read it at The Legal Intelligencer

Steep decline in law school applicants

January 28th, 2013 by Altman Weil

“As of mid-January, 27,891 people had applied for seats in American Bar Association-accredited law schools. That represented a 20 percent decline since last year (and 2012 was hardly a banner year itself, as the number of applicants fell by nearly 14 percent.) If the trend holds through the final months of the admission cycle, law schools would see a 38 percent crash since their peak in 2010.”

Read it at National Law Journal

Legal sector job growth 2012

January 22nd, 2013 by Altman Weil

The Am Law Daily is reporting on Bureau of Labor Statistics job numbers for 2012, including:

  • A net increase of 7,800 legal jobs in the US in 2012
  • A growth rate of .7% from 2011 (compared to a 1.4% increase across all job sectors)

This is a drop in the bucket compared to the 60,000+ legal jobs lost in 2008 and 2009.  The question, as the article points out, is: Are most of those jobs ever coming back?

Read it at The Am Law Daily

Legal Process Outsourcing statistics

December 11th, 2012 by Altman Weil

This falls under the ‘if you’re not paying attention, you should be’ category.  Toby Brown at 3 Geeks and a Law Blog has summarized a recent report on the burgeoning Legal Process Outsourcing (LPO) industry.  The LPO market is worth an estimated $2.4 billion and is growing annually at a rate of 28%. 

Read it at 3 Geeks and a Law Blog

More bad news on law firm financial performance

November 16th, 2012 by Altman Weil

“The drumbeat of bad financial news continued for the legal industry Thursday, as yet another survey of large law firms showed demand for their services essentially flat through the first three-quarters of the year and revenue growth for 2012 likely to fall short of last year’s single-digit gains.

The Wells Fargo Private Bank Legal Specialty Group survey found that, on average, the 115 participating firms—a group that included 60 Am Law 100 firms, 40 Am Law Second Hundred firms, and 15 boutique firms—took in 3 percent more revenue during the first three quarters of the year than they did during the same nine-month period last year. Profits, meanwhile, were up just 1.5 percent. “

The survey found billable hours down slightly for equity and non-equity partners and associates, realization rates down, and expenses up compared to the same period last year. 

What are law firms to do?  The article concludes:

“One way firms may be coping with the perfect storm of slackening demand, increased expenses, and falling realization rates is by raising their fees: Billing rates were up 3.4 percent through the first nine months of the year, and two-thirds of the firms surveyed said they plan to raise billing rates between 3 and 4 percent overall next year.”

Read it at The AmLaw Daily

3rd quarter law firm performance

November 13th, 2012 by Altman Weil

The Citi Private Bank Law Firm Group is out with its latest quarterly update on the legal profession.  Their report is based on data from 182 law firms - 131 in the AmLaw 200 and 51 others. 

“Results from the first nine months of 2012 are in, and it appears increasingly likely that the legal industry will fall short of 2011’s low single-digit profit growth. Not only did third-quarter revenue and demand growth slow from the first half of the year, demand actually posted a slight decline (-0.1 percent) compared to the third quarter of 2011, which marked the beginning of the current prolonged period of soft demand. Although expense growth also slowed during the third quarter of 2012, it continued to outpace revenue growth; in fact, the gap between the two widened, putting a further squeeze on profit margins.”

Other highlights (or lowlights) included:

  • Aside from the decrease in demand, another primary reason for the drop in revenue growth in the third quarter was a slowdown in the collection cycle.
  • Through the first nine months of 2012, larger firms generally underperformed the rest of the industry, and those with the greatest global presence fared the worst.
  • Rate increases continued at about the same pace as last year, but are still running at approximately one-half the level of historical averages.
  • After a 0.3 percent increase in 2011, equity partner head count has edged up at only a slightly greater pace (0.4 percent) through the third quarter of 2012.

Read it at The AmLaw Daily