We thank co-contributor Mike’s father-in-law Tom Basehart for sending him a folder of articles to review for possible inclusion as a posting in the blog. He was right to send these articles, because they share valuable information and trends for all of us.
American Lawyer Survey About Per Partner Profits Going Up By 8.4% in 2010 May Not Be As It Seems.
According to the American Lawyer, profit per partner at America’s 100 biggest firms rose by 8.4% in 2010, after having fallen by 4.8% in 2008 and only going up by a measly 0.3% in 2009. (That after the 250 biggest firms in the National Law Journal’s annual surveys shed more than 9,500 lawyers in 2009 and 2010, nearly 8%.)
Well, according to an analysis by Citi Private Bank Law Firm Group, some of those firms may have overstated a key measure of profitability. A person briefed on Citi’s analysis, as reported by a 2011 article in The Wall Street Journal, reported that roughly 22% of the top 50 firms overstated their profits per partner by more than 20% in 2010, an additional 16% inflated their numbers by 10-20%, and an additional 15% of the firms had profits-per-partner figures that were inflated by 5-10%.
Legal Services Spending As Percentage of America’s GDP and Growth of Alternative Fee Arrangements.
A May 7, 2011 article in The Economist reports two important statistics:
*Spending on legal services grew from 0.4% of America’s gross domestic product (GDP) in 1987 to 1.8% in 2003, four times faster than the economy; and
*Alternative fee arrangements to the traditional hourly rate paradigm have continued to grow in importance, accounting for 16% of big firms’ revenue in 2010.
The article had a cute photo of a homemade billboard saying this (apparently from the Midwest): “Mamas don’t let your babies grow up to be lawyers; let them be farmers or loggers and such.”
Average Law Firm Lawyer Salary Versus Other Countries.
According to a September 2, 2011 article in The Economist, the average American law-firm lawyer made $191,000 in 2000, compared to an average salary for all Canadian lawyers of $64,000 in 2002 and to an average salary for Australian lawyers of $90,000 in 2000. A Brookings study found that of the $170 billion spent on lawyers every year in America, some $64 billion is a “premium” produced by “market distortions.”
Contract Lawyer Staffing Is Growing, But Leading to Suits.
The Wall Street Journal, in an August 2, 2011 article, reports that temporary legal staffing in the U.S. is projected to increase by 25% cumulatively over the near two years, according to a recent estimate by research group Staffing Industry Analysts. However, it describes a lawsuit against McDermott Will & Emory LLP for using temp lawyers who allegedly turned over privileged or irrelevant documents to the U.S. Attorney’s L.A. office. McDermott has denied the allegations.
Non-Partner Associate Lawyer Salaries Rise.
In an August 12, 2011 article in The Wall Street Journal, it is reported that the average hourly rate for a non-partner associate lawyer at a law firm (and we assume this is the hourly rate for larger firms) rose to $378 in the second quarter of this year, up from $338 three years earlier, all according to data from Peer Monitor, a unit of Thomson Reuters. The current average hourly rate for first-year associates at such law firms is $283, Peer Monitor says.