Smaller and midsize law firms have been able to reduce expenses but revenues have declined faster than their ability to trim costs, according to the recently released Survey of Law Firm Economics, conducted by ALM Legal Intelligence (which is owned by The Law Journal’s parent company). The survey shows that firms reduced expenses by 1.8 percent last year as 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 revenue per lawyer of $315,000. That amount jumped to $380,000 at nine-to-20-lawyer firms. At 76-150 lawyers, revenue per lawyer 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 48 percent of receipts per lawyer. Expenses drop to 43 percent for firms in nine-20 lawyer range and to 39 percent at 21-40 lawyers. Larger firms have a similar range of expenses.
