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Smaller and midsize law firms have been able to reduce expenses — but revenues have declined faster than their ability to trim costs. That’s according to the recently released Survey of Law Firm Economics, conducted by ALM Legal Intelligence (which is owned by The National Law Journal‘s parent company). The survey shows that firms reduced expenses by 1.8 percent last year. But revenue slid by 4 percent. The survey reached more than 190 firms, many of them outside the Am Law 200. It encompasses lawyers from firms as small as two lawyers to firms of 150 attorneys or more. Data was collected for the 2008 fiscal year — which means it only gives a first glimpse into the toll the recession is taking on smaller- and medium-sized law firm players. Last year, firms surveyed collected average revenue per lawyer of $414,000. Smaller firms — in the two-to-eight lawyer range — averaged an RPL of $315,000 per lawyer. That amount jumped to $380,000 at nine-to-20-lawyer firms. At 76-150 lawyers, RPL was $427,000 and $444,000 at 150 or more lawyers. Expenses, the survey shows, claim the highest percentage of income at the very smallest of firms — at 47.8 percent of receipts per lawyer. Expenses drop to 43 percent for firms in 9-20 lawyer range and to 39 percent at 21-40 lawyers. Larger firms have a similar range of expenses. According to firms surveyed, it’s taking an average of 4.6 months from the time work is performed until clients pay for services. Overall, however, actual collections remained fairly bright — despite the downturn. Firms, depending on size, are collecting their fees 96-98 percent of the time. Where firms slip a bit is actually getting the bills out the door to clients. Most firms are turning their time into actual bills sent to clients 86-94 percent of the time. David Brown, The National Law Journal‘s editor in chief, has conducted a Webinar with a deeper look at this year’s Survey of Law Firm Economics. The program is available online.

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