Paul L. Caron

Tuesday, July 30, 2013

Revenues Up 8.5% at Large Law Firms, Down 8.1% at Small Law Firms

NLJNational Law Journal:  Revenues Up at Larger Law Firms, by Leigh Jones:

The revenue picture for law firms in 2012 was bright for large law firms — and bleak for smaller shops.

The Survey of Law Firm Economics, a joint project of The National Law Journal and ALM Legal Intelligence, shows that at law firms with more than 150 attorneys, revenue per lawyer (RPL) rose by 8.5 percent last year. But at law firms on the other end of the spectrum — those with one to nine attorneys — revenue plunged by 8.1 percent. The average per-lawyer gross receipts at larger firms were $499,518, compared with $302,818 at the small firms.

Overall, per-lawyer revenue inched up by 1.1 percent at law firms of all sizes during 2012 — welcome news compared with 2011, when it sank by 4.3 percent.

At the same time, profits per lawyer were up ever so slightly — by 0.3 percent — but that still represented an improvement over 2011's decline of 4.2 percent. A 2.6 percent increase in expenses per lawyer in 2012 contributed to the basically flat profits number, compared with a decrease in expenses by 4.4 percent during 2011.

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For large law firms, was there more revenue or fewer attorneys? Combination of both?
For small law firms, was there less revenue or more attorneys? Combination of both?

Posted by: HTA | Jul 30, 2013 8:06:01 AM

From the report: "Law firm consultant Peter Zeughauser told the NLJ that the survey indicates a "recovering economy that is tolerating some rate increases." Larger law firms are becoming "more tightly managed," he said, partly by laying off underperforming lawyers."

Unfortunately this would seem to be like the "productivity" gains often reported by large corporations after firing employees and increasing the workloads of the remaining staff. Of course "Gross Revenue Per Lawyer" increased if they cut staff perhaps 10% even if the Gross Overall Revenue" declined (hypothetically) by 5%. On the face of it all the report suggests is that if you cut staff, hold revenues relatively the same as the prior year, then RPL will improve. The question is what were total year to year comparative revenues? If the increase shows improvement in total revenues then maybe it is an uptick. Otherwise it is just a staff reduction and this has negative implications for other lawyers as well as the job market for new law graduates. Plus, as noted, the bottom is still falling out for solos and small firms and since maybe 20-30% of new law graduates were going into that form of practice (many of necessity for lack of options) this is an increasingly poor bit of data.

Posted by: David Barnhizer | Jul 30, 2013 10:05:35 AM