December 11, 2006
450 Law Firms Report Issues and Trends
The October issue of the Leadership Exchange published by the Greater Los Angeles ALA includes some of the results of the national law firm survey conducted by CD Richard Ellis Law Firm Practice Group. According to Jay Olshonsky, managing director of the Law Firm Practice Group, nearly 400 law firms participated in the survey, which was distributed to 4500 firms.
Unlike the Juris Law Firm Economic Survey, the Ellis survey included firms in the Am Law 200 list; however, 75 percent of the participants had less than 50 attorneys.
While growth was the number one management issue for reporting firms, it is worth noting that management/ leadership and competition virtually tied for the second spot on the list of most pressing issues. Of firms surveyed, 51 percent consider the economy to be their number one threat and yet 67 percent say their profits are on the increase.
While I am sure it will break the heart of the legal media to hear it, 86 percent of responding individuals reported that they were satisfied to very satisfied with the work environment of their firm. On the other hand, it was disappointing to note that firms are spending less on marketing, with 42 percent spending less than 1 percent of fee revenues on marketing. Technology is getting more money, with 37 percent spending 4 percent to 7 percent of their revenues on technology. Still, about half of reporting firms spend less than 4 percent of their revenues on the law firm factory floor (law firm technology).
Rent is an important law firm expense, and it is interesting to note that 2006 saw a decline in the per-attorney square footage. In 27 percent of firms, the per-attorney square footage is less than 600 square feet. Fifty five percent report that their facilities average between 600 and 800 square feet per attorney. Rental expense for the majority of firms (70 percent) is less than 6 percent of fees.
For more information about the survey, contact the author Jay Olshonsky at lfpg@cbre.com or go to www.lawfirmpracticegroup.cbre.com. You can read Mr. Olshonsky’s article by going to www.glaala.org. You can find additional information on law firm issues and economics in the Juris Law Firm Economic Survey of midsized law firms.
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