Bar’s 2012 Economics and Law Office Management Survey is out
By Mark D. Killian
Forty-four percent of lawyers responding to The Florida Bar’s 2012 Economics and Law Office Management Survey said their practices have experienced a decrease in business and profitability over the past two years, and 30 percent reported economic woes kept their firms from increasing their lawyers’ salaries last year.
However, while 58 percent of respondents cite the economy as having a major impact on their ability to successfully practice law, they apparently feel much more secure in their continued employment.
A full 83 percent reported satisfaction with their job security, up significantly from two years ago when only 69 percent felt secure about their jobs.
The survey also found that 31 percent of respondents adjusted their billing rates in 2012 due to the economic climate, with 18 percent instituting a nonlawyer staff hiring freeze, 16 percent eliminating lawyer bonuses, and 14 percent reporting they did not hire any additional lawyers last year.
Fewer firms, however, are laying off staff because of fiscal constraints than two years ago. Only 8 percent said their firms laid off nonlawyer staffers in 2012, down from 22 percent who reported downsizing support staff in 2010. Seventy-five percent of respondents also said they didn’t provide their support staffs with annual performance or merit salary increases in 2012. Of the firms that did, 12 percent gave between 3-4 percent bumps in pay.
Forty-seven percent of all respondents believe that recent law graduates and newer lawyers have been the most affected by the economy. Two-thirds don’t think the economy will improve for the legal profession until at least 2015, while 14 percent anticipate economic uptick this year.
When asked how they expect the economy to impact their practice in the next two years, 33 percent anticipate improved profitability; 28 percent believe it will remain the same, compared to 24 percent expecting a decrease in business and profitability. Fifteen percent said the economy does not impact their practices.
Nineteen percent of respondents said they are considering transitioning to a different career, while 15 percent say they are considering a move to a different field of practice.
The Bar poll is taken every other year to keep lawyers informed on what their colleagues are doing in various areas of law office management. This year’s survey was completed by 458 lawyers from a sample of 2,230 in-state members. The 21 percent response rate gives a 5 percent margin of error, according to Mike J. Garcia, director of the Bar’s Research, Planning, and Evaluation Department.
When asked in 2012 to list the average salary levels for attorneys in their firms, the compensation levels were down across the board from 2010, except in the case of partners and shareholders, whose pay went up by $30,000 to a median of $150,000.
Survey respondents indicated the median salary for recent law school grads with no experience fell by $5,000 from 2010 to $45,000 last year. Lawyers with fewer than three years of experience are averaging $58,000 a year, down $2,000 from two years ago; $68,500 for those in practice three to five years, down $1,500 from 2010; and $80,000 for those with six to eight years of experience, five grand less than two years ago and $10,000 less than in 2008. Associates with more than eight years experience had a median salary of $100,000, the same as in 2010.
Florida lawyers also reported spending an average of 50 hours in the office each week — the same as two years ago — and billing for 27 of those hours. Managing partners (52 hours) consistently report working the most hours in an average week. Sole practitioners (42 hours) regularly report working the least hours in an average week. The survey found no difference between men and women in the number of hours they put in per week.
The results indicate 78 percent of Florida lawyers are in private practice, while 16 percent are government lawyers or judges. The remainder work as corporate counsel, for legal aid offices, or for other employers.
Most are also solo practitioners, as 66 percent of respondents reported either operating a solo practice or working in a firm or other legal setting with five or fewer lawyers, while 12 percent say they work with more than 25 attorneys. Overall, 76 percent operate a solo practice or work in firms consisting of 10 or fewer lawyers, with 35 percent indicating they are sole practitioners.
Respondents also reported 50 percent of their offices’ gross receipts went to pay the lawyers in the office, while 20 percent went to support staff salaries. The remaining 30 percent covered all the other firm expenses. All those percentages have held steady over the past 10 years.
The poll showed that 65 percent of all respondents maintain billable hours, and, for those who keep them, 48 percent billed 1,600 hours or more in 2012. Of that group, 33 percent reported that they billed more than 1,800 hours, while slightly less than one-fifth (18 percent) billed more than 2,000 hours.
Twenty-nine percent of those who keep billable hours billed 1,000 hours or less; 6 percent billed between 1,001 to 1,200 hours; 5 percent bill between 1,201 and 1,400 hours; 12 percent billed from 1,401 to 1,600 hours; and 15 percent said they billed from 1,601 to 1,800 hours.
The survey found 65 percent of respondents list their hourly rate at $200 or higher, while 24 percent report their hourly rate to be more than $300, up from 16 percent in 2010. Additionally, 35 percent report their hourly rates were $200 or less in 2012.
More lawyers are using an hourly rate. Forty-three percent of all respondents report their law firms or offices bill hourly as the primary method of billing, while 20 percent report using a fixed or flat rate.
Less than half (40 percent) of all respondents report their firms handle contingency fee cases, down from 50 percent since 2002. Of those who accept cases on a contingency basis, the majority say those types of cases comprise 25 percent or less of the total cases handled. Forty-two percent of those handling contingency cases report receiving, on average, a 33 percent award for winning the case, while 28 percent say they receive 35-40 percent for prevailing.
In the Office
The survey found 44 percent of respondents report an average monthly accounts receivable balance of $10,000 or less, and 25 percent report an average balance of more than $50,000. Of total fees billed, 60 percent of respondents said their accounts receivable are current; 22 percent are 31 to 90 days late; 9 percent are 91 to 120 days behind; and 9 percent are in more than 120 days in arrears.
Sixty-nine percent of respondents report experiencing an increase in clients paying bills late or seeking discounts, and 65 percent have clients who want to pay their bills over time.
When it comes to accepting payment, 36 percent of respondents say their offices take Visa, 33 percent accept MasterCard, 27 percent take American Express, and 19 percent honor Discover Card.
Between one-quarter to two-fifths of respondents report that they anticipate their offices will increase their budgets in technology (39 percent), website modifications (35 percent), social media (29 percent), and online advertising (28 percent) in the coming year.
Almost half (48 percent) of offices now provide their lawyers with laptops, while 41 percent equip their lawyers with smartphones, with 33 percent of those also covering a mobile data plan. Respondents said 15 percent of legal offices provide their attorneys with tablets.
Sixty-three percent of those surveyed said they carry professional liability insurance. Of those who don’t, 40 percent say they are not in private practice, while 20 percent report that they think it is too expensive to maintain.
Twenty-eight percent of those who carry professional liability insurance have coverage limits of $1 million to $2 million per claim. Another 21 percent carry $500,000 to $1 million in coverage per claim. Thirty-four percent report having a $5,000 deductible and 23 percent carry a deductible of $10,000.
The survey also found that only 41 percent of legal offices in the state had a hurricane or disaster preparedness plan.