After a week of stories about “big law is dying” the continuation of that news angle was somewhat blunted today with the announcement of the 2013 Survey of Law Firm Economics, which was first published in 1972.
The study, conducted jointly by ALM and The National Law Journal, is a survey of 2012 economic figures and “contains information about nearly 10,000 lawyers from 159 U.S. law firms,” according to a press release announcing the study.
What is the big story from the study? It is that big law grew and small law shrank last year.
“This year’s survey benchmarks two diverging trends we’ve seen for a while now involving the law firms on opposite ends of the spectrum in the U.S.,” said Kevin Iredell, vice president of ALM Legal Intelligence.
“The largest firms grew significantly last year, with a strong 9 percent increase in RPL for the firms with 150 lawyers or more. Meanwhile, the smallest firms continued to face revenue challenges, with a sharp 8 percent decline in RPL for the firms with fewer than 10 lawyers.”
Here are our five quick take-aways from reviewing reports on the study.
1. Overall U.S. law firms grew. Law firms overall grew by 1.15 percent nationally, which the announcement aptly characterizes as “modest.”
2. Revenue at large law grew was much higher. “Firms with more than 150 attorneys boosted their average revenue per lawyer to nearly $500,000 in 2012 – an 8.5% jump compared with the previous year,” The Wall Street Journal reported.
3. Profits also, albeit more slowly. “At the same time, profits per lawyer were up ever so slightly – by 0.3 percent – but that still represented an improvement over 2011’s decline of 4.2 percent. A 2.6 percent increase in expenses per lawyer in 2012 contributed to the basically flat profits number, compared with a decrease in expenses by 4.4 percent during 2011,” according to an article in The National Law Journal.
4. Litigation eyed for growth. The majority of large law firms see litigation as an area of growth – 64 percent according The National Law Journal’s report. This finding is consistent with several other surveys reported by Corporate Counsel, suggesting that large law’s customers, inside counsel, also expect litigation to increase.
5. Return of the merger? ALM’s announcement plainly says that “mergers are back on the table” as 47 percent of firms are “either actively seeking or open to merger discussions,” which is up five points from the previous year. By comparison, the 2013 Law Firms in Transition survey, conducted by consulting firm Altman Weil found 62 percent of firms were considering acquiring groups; 27.1 percent were considering acquiring firms; 10.3 percent were considering merger of equals, and 4 percent were considering being acquired.
What take-aways did you have? Do you think this blunts the “big law is dying” story?
If you enjoyed this post, you might also like:
Seven Essential AFA Articles Every Lawyer Should Read