Law firm billing rates increase along with revenue; productivity is down
Law firm revenue grew 4.1 percent in the first half of the year, compared to a 3.3 percent increase in the same period last year.
The growth in revenue was “surprisingly strong,” and was largely due to higher billing rates, the New York Times DealBook blog reports. The findings from Citi Private Bank’s Law Firm Group are summarized in an article in the Am Law Daily (sub. req.) by the chairman of the group, Dan DiPietro, and analyst Lauren Harsha.
Billing rates increased an average of 3.2 percent in the first half of the year, while timekeeper hours increased by only 0.3 percent.
Expenses grew 3.1 percent in the first half of the year, and associate pay hikes “will put upward pressure on second-half expenses,” according got the Am Law Daily article. The authors also note a 1.2 percent decline in lawyer productivity, driven by an increase in lawyer head count.
“As we’ve reported before, significant excess capacity continues to plague the industry,” DiPietro and Harsha write. “The six-month productivity results indicate the problem is worsening. The impact will likely be continuing client pressure for deep discounts.”
The findings are from a survey of 180 law firms, including 130 of the nation’s 200 largest law firms.
See also:
ABAJournal.com: “Law firm revenues rose nearly 6 percent in the first quarter, but the good news may not last”
