Midsized and Small firms hit hard by Recession (WSJ)

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Midsized and Small firms hit hard by Recession (WSJ)

Postby miamiman » Mon Aug 09, 2010 1:29 pm

http://blogs.wsj.com/law/2010/08/09/fac ... nch-belts/
As we’ve recounted over and over again in the last few years, the recession has taken a deep toll on the nation’s big law firms.

But how has it affected smaller and mid-sized firms? Well, it hasn’t been kind to those either.

A forthcoming study by the National Law Journal of small and mid-sized law firms (2-150 lawyers) will provide a nice snapshot of precisely how law firms of this size responded to the recession in 2009. Click here for more info from the survey; here for the table of contents and methodology.

The findings are alternatively predictable and surprising. For instance, law firms have slashed costs — predominantly by trimming lawyers and support staff. No big surprise there. A finding that’s perhaps less expected: across the board, these firms in 2009 increased their average billing rates, at both the senior partner and associate ranks.

Has the combination — tighten belts and raise prices — worked? Maybe. But the industry is still not where it wants to be. According to the survey:

* Revenue per lawyer in 2009 at the law firms that participated decreased 0.2 percent, from $413,086 to $412,220;

* Average billable hours for senior partners decreased 1.7 percent from 1,656 to 1,628 (though the average billable hours for 5th year associates increased just a touch, from 1,801 to 1,811).

* Median total compensation for senior partners decreased 1.7 percent from $328,260 to $322,813.

“This year’s Survey of Law Firm Economics shows just how deeply the recession has affected smaller and midsized law firms around the country. For the first time ever, we’re seeing year-over-year declines in revenue per lawyer, expenses per lawyer, and compensation for senior partners,” said David Brown, editor in chief of The National Law Journal.

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Re: Midsized and Small firms hit hard by Recession (WSJ)

Postby 20160810 » Mon Aug 09, 2010 5:46 pm

A lot of this is because smaller firms don't have as many clients, so if, for instance, they worked a lot with developers, the housing crash was likely to have a more deleterious impact on the firm's bottom line. This is especially true for small and mid-sized firms in markets that got torched by the housing crash (Phoenix and Vegas especially).

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