Archive for the ‘Surveys’ Category

Law firm growth options and 5-year outlook

August 8th, 2012 by Altman Weil

The 2012 Law Firms in Transition Survey asked firm leaders about their growth plans for 2012 and their expectations for firm growth over the next five years.  This special report from the survey highlights lateral growth, new offices, mergers and acquisitions and breaks out the results by firm size.

Read it at Altman Weil

Law firms’ greatest challenges

August 2nd, 2012 by Altman Weil

The 2012 Law Firms in Transition Surveyasked firm leaders to comment on their firms’ greatest challenges in the next 24 months.  In an Altman Weil special report, we’ve identified the top areas of concern, analyzed responses by firm size, and included a selection of sample comments from firm leaders.

Read it at Altman Weil

Law firm and client perspectives on AFAs

July 16th, 2012 by Altman Weil

ALM Legal Intelligence has released a new survey, Speaking Different Languages: Alternative Fee Arrangements for Law Firms and Legal Departments.  Some of this is well-travelled ground:  almost all those surveyed use at least some alternative fees; AFA use is increasing, but slowly; law departments like AFAs because they help to control costs and make costs more predictable; law firms like them primarily because their clients like them.

But the survey also provides some interesting new insights, particularly in the comparison between the law firm and law department experiences:

  • Law departments initiate the discussion about AFAs 81% of the time; law firms initiate only 13% of AFA discussions
  • 39% of law departments routinely make specific suggestions on how to structure AFAs; only 18% of law firms do so
  • 54% of law firms and 51% of law departments believe that firms have ‘insufficient experience defining or managing work on an AFA basis.’  Only 26% of firms and 25% of departments believe that corporate law departments have insufficient experience.
  • However, law firms are trying to close the experieince gap - 60% report AFA training efforts for partners and/or associates, while only 22% of law deparments offer training.  
  • 90% of law firms have measures in place to assess the financial success of AFAs.  In marked contrast only 20% of law departments are measuring the value of AFAs to their organizations.
  • Law departments think law firms are making steps in the right direction:  55% say law firms are more cooperative in structuring and implementing AFAs than they were two years ago.  In addition, 19% say firms are making ‘a lot of progress’ on AFAs and 59% say that are making ‘a little progress.’

Read it at ALM Legal Intelligence

2012 Law Firms in Transition Survey

May 16th, 2012 by Altman Weil

Altman Weil has released its fourth annual survey of Managing Partners and Chairs of US law firms with 50 or more lawyers.  The survey includes sections on economic performance and billing rates, alternative fee arrangements, firm growth, lawyer and staffing levels, succession planning, client relationships and the future of the profession. 

Many of the 2012 Law Firms in Transition Survey findings take the form of good news/bad news:

  • Revenue was up in most firms, but so were expenses. 
  • Profits were up, but at a pace that is likely to be permanently slowed. 
  • Firms are raising their rates, but many do not expect to realize the full increase.
  • Fewer law firms expect to make personnel cuts, but in those that do, equity partners are among the most vulnerable. 
  • Associate compensation may begin to rise again, but will be spread across smaller incoming classes.
  • Firms are gaining experience with alternative fee arrangements, but most firms are still using AFAs reactively and less profitably than hourly billing. 
  • Firms have profitability data available, but they don’t use it as well as they might. 
  • Law firm leaders have moderate to high confidence about their own ability to navigate the changes ahead, but they are less sure that their partners are paying adequate attention. 

Read it at Altman Weil 

New billing rate study

April 17th, 2012 by Altman Weil

Software company, TyMetrix Legal Analytics, in association with Corporate Executive Board, has announced publication of the 2012 Real Rate Report.  The report analyzes law firm billing rate trends based on data from $7.6 billion in legal bills from 4,000 law firms, issued between 2007 to 2011. 

TyMetrix shared these highlights:

  • The Most Expensive Lawyers Are Getting More Expensive. Rates for the highest billing partners ($800+ per hour) grew nearly three times faster than rates for the lowest billing partners (less than $300 per hour), and rates for the highest billing associates ($500+ per hour) grew nearly five times as fast as the lowest billing associates (less than $200 per hour).
  • Clients Are Willing to Pay a Premium for Large Law Firm Work. The percentage increase for firms with more than 1,000 lawyers was double what the smallest firms experienced. The average hourly rates from 2009-2011 for law firms with 501-1,000 lawyers increased by 13 percent compared to a 4 percent rate increase at law firms with 1-50 lawyers.
  • Lawyers Charge Different Hourly Rates to Different Clients For Similar Work.  In 2011, 90 percent of lawyers charged different rates for similar types of work. Intellectual property and commercial contracts practices had the highest percentage difference in rates (23.1 percent and 18.7 percent, respectively), while regulatory and finance/securities/banking saw the lowest percentage difference in rates (about 11 percent).
  • Higher Spend Equals Higher Rates - Consolidation Not Necessarily Associated with Lower Hourly Rates. Some in-house legal departments have had success consolidating work into a single law firm, but the data reveals that rates actually tend to increase as a law firm takes on more work from a client.
  • Use of Entry-Level Lawyers Can Add Significant Costs to Legal Matter.  The data confirms that the use of entry-level lawyers (associates with less than 2 years’ experience since passing the bar exam) continues to decline.  Notably, the data also show that matters staffed with entry-level associates tend to cost as much as 20 percent more.

Read it at TyMetrix

Needless to say, this is interesting stuff and has gotten some attention:

The AmLaw Daily talked to TyMetrix:

“What it’s really showing is that there’s an increased premium being paid for experience and expertise,” says Julie Peck, vice president of strategy and market development at TyMetrix. “Some parts of the lawyer market are able to raise rates much more quickly, and are more impervious to economic forces than others.”

Read it at the AmLaw Daily

The Wall Street Journal talked to some General Counsel about the report’s findings:

“I’m really seeing pretty much everybody across the board, big and small [law firms], trying to raise their rates. The small ones are not as successful,” said Lewis Steverson, general counsel for Motorola Solutions… “We get more push-back from the big firms.”

and

“There are a large number of lawyers today who find themselves in the uncomfortable position of being, for lack of a better phrase, commodity service providers,” said Ken Grady, deputy general counsel at footwear company Wolverine World Wide Inc. “You don’t see a lot of big rate increases being asked for in those areas, and that’s not something they expect to get.”

Read it at the Wall Street Journal (subscription required)

Law firms growing again

March 26th, 2012 by Altman Weil

The 2012 NLJ 250 - ALM’s list of the 250 largest US law firms - was released today, and it looks like firms are starting to grow a little again:

“After three years of flat to negative growth, 2011 was the year that the nation’s 250 largest law firms started getting bigger again.

Headcount among NLJ 250 firms was up a collective 2,132 lawyers…. That represented growth of 1.7 percent — in line with the average increase during the past 10 years, but well below the 4 to 5 percent growth rate of the 2005-08 go-go years….

Ward Bower, a law firm management consultant with Altman Weil Inc., said most of the firms that made the difficult choice to downsize early in the recession are now looking to grow again. “The firms that hunkered down started dusting off their strategic plan and implementing it a little earlier than others,” he said. “And I hope next year we would see the vast majority of firms in growth mode.”

As an interesting side note, ALM tells us that the NLJ 250 is becoming the NLJ350 as of April 16th when they re-release the list with firms ranking 251-350 in size.

Read it at National Law Journal

Paperless law offices

March 23rd, 2012 by Altman Weil

Does your firm convert incoming paper documents to electronic format on a systematic basis? It might come as a surprise that nearly a quarter of law firms say they have formal paperless office programs in place.  Last December, Altman Weil conducted a Flash Survey on this topic that offers some insights for firms reviewing their own paperless initiatives or considering implementing one.

Read it at Altman Weil

Improving law firm practice groups

March 14th, 2012 by Altman Weil

This week Altman Weil released a new piece of research on law firm practice groups showing that there is a lot of room for improvement in this important area.  So what should firms do to improve their practice groups? 

 We recommend that firms consider each of the following to consistently accelerate performance:

1.  Rethink your Practice Groups as externally-focused business units oriented to clients, strategy, competitiveness and growth (rather than organizational and operational issues)

2.  Create a formal planning process that results in short, focused, achievable plans for every Practice Group

3.  Clarify the Practice Group Leader role with a clear, focused job description

4.  Require leadership training for every Practice Group Leader

5.  Hold leaders accountable for performance through a formal evaluation and feedback program.

6.  Move as many administrative tasks as possible to non-lawyer professionals who support the groups or to others in the firm

Read the full survey at Altman Weil

What do clients think about law firm marketing?

February 17th, 2012 by Altman Weil

Law firms that want to get on a potential client’s radar screen for the first time should focus on personal contact and substantive content according to the Altman Weil Chief Legal Officer Survey conducted last fall.  We asked CLOs to rate the effectiveness of ten typical marketing activities including sponsorships, directory listings, social media and more.  Take a look at how they scored.

Read it at Altman Weil

AmLaw leaders look to 2012

December 1st, 2011 by Altman Weil

The American Lawyer has released the results of its ninth annual survey of leaders of Am Law 200 firms—and the picture they paint is not particularly rosy.

“… nearly a third (29 percent) of respondents said they expect their once-bustling corporate practices to be their most challenged practice group next year. Barely any respondents—just under 2 percent—said they anticipate a significant increase in deal flow in 2012, while 36 percent expect it to be flat. Meanwhile, many firms are seeing collection times lengthen: Forty-three percent of respondents said their clients are taking longer to pay, with one law firm leader explaining in an interview that 90 days is the new 30. And while almost all respondents (98 percent) said they expect to raise rates next year, only 5 percent anticipate hikes of more than 5 percent.”

What’s a law firm to do?  The survey points to a few key areas that firms will focus on in 2012:

  • Business development - especially through key client relationships
  • Hiring laterals with books of business - although survey respondents note that laterals often fail to meet expectations
  • De-equitizing unproductive partners
  • Improved efficiency - including project management, knowledge management and staffing alternatives
  • Alternative fees - with firms finally starting to figure out how to make them work effectively

Welcome to the new normal…

Read it at The American Lawyer