A report released this month doesn’t lay out a rosy outlook of the national BigLaw market.
The State of the Legal Market report outlines decreasing attorney productivity and lost revenue. A few experts on shifts in the legal market say the study’s results are well worth considering, but its definition of productivity isn’t the only way to look at things. And while Colorado isn’t immune to the pressures on the legal market defined in the report, the state’s small presence of major law firms makes it necessary to view the market through a different lens than that of major law firms examined by the study.
The State of the Legal Market report, released by Georgetown Law’s Center for the Study of the Legal Profession and Thomson Reuters, comes out annually. This year’s report highlights factors such as flat demand, decreasing profit margins, declining revenues, a drop in productivity and loss of market share to other types of legal service providers as threats to law firm profitability. The report goes further to say that firms might not be prepared to take on the downturn because strategies firms have used to mitigate past slumps, such as raising hourly rates and cutting attorneys and staff, likely won’t be as effective anymore.
Productivity is traditionally defined as hours billed per lawyer each year. The study focused mainly on BigLaw and defined firms below the top two tiers of the AmLaw rankings as mid-size. According to the report, the average lawyer today bills 156 fewer hours annually compared to the beginning of 2007, which results in lost revenues of $74,100 per lawyer for firms. The report calculated the figure based on an average hourly rate of $475.