Confirmed: 2009 Was a Bad Year

David Brown, National Law Journal, law firm economicsNo matter which statistic you pick, 2009 was a bad year for small to mid-sized law firms, according to the new ALM Survey of Law Firm Economics. The responses from 187 law firms, ranging from 1 to 150 employees (with only 7% from large law firms) were all bad news.

A double-whammy occurred.  "Not once in 25 years has there been a decline in revenue per lawyer two years in a row," said David Brown, Editor in Chief of the National Law Journal. It dropped 5.5% — the worst drop since 1985.

Added to this, "personnel costs (especially spending on lawyers), actually increased slightly in 2009," he added.  Personnel costs consumed 78% of fee revenue in 2009.


  • It took 2.3 months on average to collect fees from clients.
  • Equity partners wrote off 7% more unbilled time.
  • Realization rates declined 3%, from 88% to 85.9%.

Lawyer compensation, law firm marketing, marketing directorEquity partner compensation averaged $358,000, slightly up from 2008, but down from a 2007 high of $374,000.

On the one hand, the average equity partners billing rate was $342 — up $10 an hour from the previous year.  (To reach the top quarter of billable rates, a partner had to charge $400 per hour.) 

However, equity partners averaged 1,636 hours in 2009 — down 3% from 2008 — the second consecutive annual decline. Associates billed 1,746 hours on average, down 1.8%.

Billing rates of LawyersAt .56 to 1, the ratio of associates to partners is at its lowest level in 25 years. This reflects the widespread layoffs of lawyers in 2009 and the cutbacks in hiring by midsized law firms. Firms of 21-150 saw declines of 11% or worse in the ratio.

The survey sells for $1,065.

Read more detail on Legal News Directory – Legal Marketing

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