Economic Survey of Lawyers in Alabama 2010

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1 Economic Survey of Lawyers in Alabama 2010 prepared by the Practice Management Assistance Program a member service of the Alabama State Bar 1

2 Table of Contents Introduction... 3 Methodology... 3 Demographics of Respondents... 4 Narrative Summary... 5 Employment Setting and Income Information... 5 Attorney and Staff Benefits... 8 Private Practice Attorneys... 8 Written Fee Agreements... 8 Billing Methods... 9 Time Records Billing Statement Information Standard Hourly Rates Minimum Hourly Billing Requirements Caseload Accounts Receivable Areas of Practice Associate Attorneys Overhead costs Administrative Assistance Legal Secretaries Legal Assistants/Paralegals Retirement Unemployed Attorneys Survey Questionnaire and Responses General Income Information Current Employment Firm Size and Areas of Law Retirement Legal Secretaries Legal Assistants Practice Setting Billing Methods Hours and Rates Fee Agreements and Billing Statements Position In Firm Associate Attorneys Overhead Fringe Benefits Unemployed Attorneys Retired Attorneys Demographics

3 Introduction This report presents the results of a survey of attorneys in Alabama conducted by the Alabama State Bar. Information concerning the economic aspects of the practice of law in Alabama, including information on: (a) lawyer income; (b) lawyer employment; (c) practice setting; (d) legal staffing; (e) billing methods; (f) hours and rates; (g) use of fee agreements; (h) collections; (i) overhead and expenses; and (j) retirement plans and activities was collected through this survey. Certain questions were asked only of private practice attorneys, retired attorneys and unemployed attorneys, respectively, participating in the survey. Methodology Between August 16th and November 9, 2010, the Alabama State Bar sent an to two groups each of 1,000 randomly selected members in good standing, both those holding regular and those holding special licenses, requesting that they participate in an online survey that was estimated to take about one half hour to complete. Of those 2,000 members selected at random to participate, 463 started the survey and 427 completed it, resulting in a 22% response rate and a 92.2% completion rate. Because not all questions were asked of all respondents and not all respondents responded to all of the questions which they were asked, percentages are based on the actual number of individuals who responded to each particular question. All probability samples contain some sampling error the extent to which the views of respondents differ from the views held by the entire population from which the sample was selected. For this survey, one can be 95% confident that the results for each part of the survey which was taken by all of the respondents are not more than 4.5% (+ or 4.5%) different from that of the entire population of Alabama lawyers. Sampling error is greater when subgroups of respondents, such as respondents engaged in private practice, are examined. Sampling error does not reflect the influence of other factors, such as question wording or order, which can also influence the results of the survey. Several measures of central tendency are mentioned in this report. For those who are not familiar with the definitions of these terms, we provide the following: mean the average for all values given in response to a particular question. The mean is calculated by adding all of the responses provided and then dividing that sum by the total number of responses. median the middle value of a series of numbers which are first placed in rank order. Half of the values will be greater than the median and half will be less than the median. Because the median value truly is in the 3

4 middle it is often a better indication of midpoint response than is the mean, which can be distorted by one or two responses that are much higher or lower than the rest. Demographics of Respondents All survey respondents were asked to provide demographic information so that we could determine whether the respondent pool accurately reflected the demographic makeup of the bar as a whole, as indicated by our membership records. Almost 64 % of respondents were male and 36 % were female. At the time the survey was conducted, males made up 70% of membership and females made up 30%, based on information contained in our membership records. The majority of the survey takers (87.8%) classified themselves as Caucasian, 5.9% classified themselves as African American, 3.5% indicated that they do not classify themselves by race, and almost 3% classified themselves as Asian, Hispanic, Native American or Other. At the time the survey was conducted, ninety-three percent of our members were Caucasian, 6.2% were African American and 0.8% were classified as Other, based on self-classification at the time of admission to the practice of law in Alabama. The survey respondents ranged in age from under 30 to 71 and over, with the largest single group (27.9%) falling into the age group. The next largest age group was (21.3%) followed by the age group (20.8%). Thus, seventy percent of the survey takers were between the ages of 31 and 60. Less than 10% were under 30 and right at 20% were over 61. The median age range for survey takers was The largest single group of respondents (24.1%) reported that they have been in practice for years. The next largest group was 22% for 4 10 years, followed by 21.5% for more than 30 years, 17.8% for years, and 14.5% for less than 3 years. The median range of years in practice by survey takers was years. Thus, it appears that the gender and race of the survey respondents were roughly in line with the bar s membership records, however, the percentage of women who responded to the survey was slightly higher than their representation in the bar as a whole. Nonetheless, we believe that the survey results are fairly representative of the overall membership. 4

5 Narrative Summary Employment Setting and Income Information The survey began by seeking information about general work setting and gross income from the respondents. The goal was to capture a picture of how much Alabama lawyers as a whole earn, regardless of whether they are in private practice or employed in some other setting. Of those responding to the survey, 73.5% were employed full time (40 hours or more per week) and an additional 12.5% were employed part time (less than 40 hours per week). Retirees made up 6.3% of respondents while 4.6% of respondents were unemployed but seeking legal work and 2.2% were unemployed but not seeking work of any type. Less than 1% of respondents were unemployed and seeking non-legal work. Respondents came from all different firm-size settings. The largest single group was solo practitioners at 41.5% of respondents. Respondents from firms of 2 to 5 lawyers were next at 20.8%, reflecting the fact that about two-thirds of Alabama lawyers practice in firms of five lawyers or fewer, with respondents from other firm settings as follows: 6 10 lawyers at 6.4%; lawyers at 2.6%; lawyers at 4.6%; lawyers at 3.3% and more than 100 lawyers at 11.5% of respondents. Nine and two-tenths percent (9.2%) of respondents indicated that firm size was not applicable to their employment setting. 5

6 Perhaps reflective of the financial difficulties that many lawyers experienced following the economic downturn which began at the end of 2008, the largest single group of respondents (22.8%) indicated that they made less than $25,000 before taxes in The next largest group (21%) stated that they made between $50,001 $75,000, and this was also the median salary range for all respondents. Twenty-eight percent (28%) of respondents reported income of more than $100,000 per year. When comparison is made to the surveys conducted by the bar in 1986 and 1998, it appears that, overall, individual lawyer income may be falling, particularly at the margins, with more lawyers reporting income of less than $50,000 than in 1998 and fewer lawyers reporting income of more than $100,000 than in 1998, while the percentage of lawyers reporting income of between $50,000 and $100,000 remained relatively even across all three surveys. The number of respondents in the less than $50,000 range increased from 24% in 1998 to 36.9% in 2010 (still under the 47% figure in 1986), while the number of respondents in the more than $100,000 range fell from a high of 40% set in the 1998 survey to 28% in 2010 (yet still more than the 17% figure in 1986). The number of respondents in the middle range of $50,000 to $100,000 remained fairly steady at 35.1% in the 2010 survey Less than $50,000 $50,000 to $100,000 More than $100, When the responses were analyzed to eliminate responses from part time practitioners, the figures did not change much. Almost 27% of full-time lawyers made less than $50,000; 39.6% made between $50,000 and $100,000; and 31% earned more than $100,000, still 9% fewer than were in that range 12 years ago. This seems to also reflect the overall responses to whether income increased, decreased or remained the same in 2009 compared to Thirty-nine percent (39%) of all respondents indicated that their income increased, 32% indicated that it decreased, and 26% stated that it stayed about the same over that one year period. The other 3% indicated that they did not know. Firm size seemed to have an effect on income. Of those who identified themselves as solo practitioners, 48% reported earning less than $50,000; 33% 6

7 reported earning between $50,000 and $100,000; and 19% reported earning over $100,000. By comparison, in firms of 2 to 5 lawyers 21% reported income before taxes of less than $50,000; 40% reported earning between $50,000 and $100,000; and 39% reported income before taxes of over $100,000. Interestingly, four respondents who identified themselves as solo practitioners reported earning more than $350,000, the top figure we asked about, in One respondent each from firms of and lawyers indicated reaching this income level, as did 3 respondents who identified themselves as being from firms of more than 100 lawyers, reflecting the possibility of high earnings from the practice of law in any firm setting. Only time will tell whether these numbers showing decreasing lawyer income are a result of the recession and will improve by the time the next economic survey is done, or reflect the greater competition resulting from the increase in the number of lawyers in Alabama since 1986 and the trend toward commoditization of certain types of law practice and the lower income levels that often results from a commodity practice and increased competition. 7

8 Attorney and Staff Benefits The survey attempted to determine what benefits were available to both lawyers and legal support staff members in both law firms and from other legal employers. Almost 60% of respondents reported that their employer provided them with paid vacations and holidays and 51% reported receiving paid sick leave. Forty-two percent (42%) reported that their firm made retirement fund contributions on their behalf. Other popular benefits were reimbursement of CLE expenses (84%), professional membership fees (80%). Forty-two percent (42%) received paid medical insurance for the attorney and 35% reported that medical insurance for their immediate family members was also paid for by their firms. Thirty-eight percent (38%) reported having access to a flexible work schedule, but only 0.7% reported that their firm offered the possibility of a sabbatical. Fringe benefits for support staff were actually more generous in some cases than were benefits for attorneys, with nearly 89% of respondents reporting that their firm or organization provided paid vacations and holidays for employees. Seventy-five percent (75%) provided paid sick leave and 48% made retirement contributions on behalf of support staff. Almost 49% reported that support staff members received paid medical insurance for the staff member and 35% reported that their firm or organization provided medical insurance for both staff members and the members families. Private Practice Attorneys Private practice attorneys were asked a number of questions about their firms that were not applicable to attorneys working in other settings. Because of the smaller number of respondents answering these questions, the confidence level in the responses in this section is lower than for the survey as a whole. Written Fee Agreements The largest single group of private practice attorney respondents (43%) reported that they usually use a written fee agreement, followed by 38% who always use one, 15% who seldom use one and 4% who never use a written fee agreement. When compared to the results of the 1986 and 1998 surveys it appears that the use of fee agreements is fairly consistent. In the 1998 survey 42% of private practice respondents indicated that they always entered into an employment contract before performing work and 24% indicated that they did so most of the time. In the 1998 survey 5% indicated that they never used fee agreements. 8

9 Billing Methods The largest single group of private practice attorney respondents (47%) indicated that they utilize hourly billing as their primary billing method, followed by 27% who use a combination of two or more billing methods. Around 18% use fixed or flat fees, while almost 8% reported using contingency fee billing as their primary billing method. No one reported using value-based fees (fixed fee plus bonus for results) as their primary billing method. The majority of private practice attorneys in Alabama do not seem to utilize contingency fee billing, with 85.6% reporting that they use contingency fees in 25% or fewer of their cases and 42.6% reporting that they never charge contingency fees. In 1998 around 20% of respondents said that they never used contingency billing. In 2010 only 5.8% of private practice attorney respondents reported using contingency billing in over 75% of their cases. For those who did report using contingency billing, 70% reported that the average percentage of the award they received if they won the case was between 30% and 39%. The next largest group (14%) reported receiving between 20 and 29% of the award. These figures are in line with the results of the 1998 survey, when 53% of private practice attorneys handling contingency cases said that, if they won, they received, on average, 33% of the award; about 11% said that they received less than 33% of the award; and 25% reported receiving, on average, at least 40% of the award. 9

10 Time Records Approximately half (51%) of Alabama private practice attorney respondents keep written time records, with another 26% reporting that they always keep them except in contingency or fixed fee cases, while 20% reported that they keep written time records only for selected cases. Less than 4% of Alabama attorneys in private practice reported that they never keep written time records. The largest single group of private practice respondents (45%) reported that they use paper time sheets to capture their time, while 36% reported using a computer time and billing software program. Around 13% reported that they reconstruct their time records from calendar entries and file review. For those who utilize a software program for time entry, no single program dominated but of the 74 specific responses provided, Timeslips was the most frequently used software program, followed by QuickBooks. As would probably be expected, the most frequently reported minimum billing time interval was 6 minutes (0.1 hour) by 62% of the private practice respondents, followed by 15 minutes (17% of respondents) and 10 minutes (10% of respondents). Billing Statement Information When asked what information they regularly include on their billing statements, almost 90% of private practice attorneys reported itemizing the services provided. Seventy one percent (71%) included the total time spent by all lawyers and 68% percent also included the time spent by individual lawyers. Sixty-five percent (65%) reported including the prior unpaid balance and 59% reported including an itemized list of disbursements. Fewer than 40% stated that they include the remaining balance in trust or the total time spent by legal assistants/paralegals or their hourly rate in their billing statements. Almost 45% of private practice respondents reported including a narrative summary of activities or services. Standard Hourly Rates When asked about their standard hourly rate, the largest single group of private practice attorney respondents (16.2%) reported it to be between $150 and $174. Fiftyone percent (51%) of those surveyed charged $174 per hour or less, while the other 49% charged a standard hourly rate of between $175 and $500 or more. 10

11 When compared to the 1998 survey, hourly rates have risen, but not a lot. At that time the average rate charged was $129 per hour while the median rate was $125. About 19% of respondents in 1998 reported charging more than $150 per hour, while only 14% charged less than $100. In 2010 the median standard hourly rate was between $150 and $174. Minimum Hourly Billing Requirements The overwhelming majority of private practice attorneys (88.8%) reported that their firm did not have a published minimum annual billable hours standard or requirements in For those firms which did have published minimum hourly billing requirements for associates and partners/shareholders in 2009, almost 68% stated that the requirement for associates was between 1,801 and 2000 hours. With regard to the published minimum billing requirements for partners/shareholders, the largest single group (38.5%) reported the requirement as also falling in the 1,801 to 2000 hours 11

12 range. Around 11% reported requiring 1,000 hours or less of partner/shareholders and around 11% reported requiring between 1,401 and 1,600 hours of such attorneys. Despite these published minimum billing requirements, when all private practice attorney respondents were asked how many hours they personally billed in 2009, the majority (52%) reported billing 1,000 hours or less, however 12% reported billing more than 2,000 hours during that year. Caseload The survey also attempted to obtain a picture of the average private practice attorney s caseload. When asked how many cases they handled in 2009, the responses were as follows: Less than % % % % % More than % 12

13 From this we can determine that almost 70% of Alabama attorneys in private practice handle 100 or fewer cases per year. Accounts Receivable Because unpaid legal fees can be a substantial drain on a law firm, the survey attempted to determine the average monthly accounts receivable balance carried by Alabama firms. Surprisingly, 35.5% of private practice respondents (the largest single group) reported that their firm does not prepare a report on this information. For those firms that do prepare such a report, 13% reported that the average monthly accounts receivable balance was $1,000 or less, 14.5% reported it to be between $1,001 and $5,000; 12% reported it to be between $5,001 and $10,000; and 10.7% reported it to be between $10,001 and $20,000. A little more than 7% had average monthly accounts receivable balances of over $50,000. Excluding personal injury cases, 42% of private practice respondents reported that their firm does not advance costs, while 74% reported advancing costs of $1,000 or less on behalf of each client. 13

14 The survey respondents believed that the majority of their fees billed are paid in a timely manner, with 18.5% reporting that they collected all fees billed in 2009, 24.5% reporting that they failed to collect less than 5% of billed fees, 20.8% reporting that they failed to collect between 5 and 9% of billed fees, and 19% reporting that they failed to collect between 10 and 20% of fees billed during

15 Eighty-three percent (83%) of private practice attorneys reported that they do not charge interest on past due fees and almost 79% reported that they do not accept credit or debit cards for payment of fees or costs. Areas of Practice Private practice attorneys were asked to indicate up to 3 primary areas of practice. Family law was the single most reported area with 36% of respondents indicating it, followed by 32% who indicated criminal law and 29% who indicated general practice. Twenty-eight percent (28%) stated that they engaged in civil litigation; 25.5% in wills, estates and trusts; 18% in real estate; and 14% in personal injury work. The least selected areas of practice were securities, mergers and acquisitions and antitrust at 0.4%; pensions and benefits, banking and finance and health law at 0.8%; and intellectual property law at 1.2%. Juvenile and disability law were the most often listed practice areas under Other. See the questions and responses at the end of this report for the full breakdown of all respondents and practice areas. Associate Attorneys Private practice attorneys were also asked about hiring and starting compensation of newly admitted attorneys. Almost 57% of respondents said that in 2009 their office did not hire a lawyer who was admitted to the practice of law during 2008 or Of those who did hire such an attorney, the median salary range was between $75,000 and $100,000, with responses ranging from a low starting salary of below $25,000 to a high of more than $125,000. In comparison, the median starting salary for new attorneys in the 1998 survey was $33,000. Private practice respondents were asked to indicate how associate attorneys in their firms were compensated in Almost 42% responded that they had no associate attorneys but, of those who did, the majority (40%) responded that associates were paid a fixed salary plus a year end bonus. Other compensation plans were fixed salary only (11%), other unspecified arrangement (3%) and fixed salary plus percentage of fees associate personally generates, percentage of firm s gross income and hourly rate multiplied by hours worked, all at 1.4% each. When asked whether their firm planned to hire one or more associate attorneys (someone having less than 3 years experience) in 2011, almost 70% responded no, while slightly more than 30% responded that they did, indicating a poor hiring outlook for recent law school graduates. 15

16 Overhead costs Private practice attorney respondents were asked to provide information on overhead and lawyer compensation as a percentage of gross receipts. The median percentage of gross income of the various expenses and lawyer compensation was as follows: rent or other occupancy expense 10%, staff salaries 20%, equipment expense 5%, client development expense 2%, legal research expense 2%, all other miscellaneous expenses 10%, and lawyer compensation 50% of gross receipts. These figures, particularly for lawyer compensation, are in line with national benchmarks. Rent Staff Salaries Equipment Client Development Legal Research Miscellaneous Lawyer Comp. Administrative Assistance Information about the use and cost of support staff can help lawyers determine prevailing wages. Legal Secretaries Respondents in both private practice and other legal employment settings were asked about the legal secretaries they employed. Reflecting the reliance by many lawyers on technology, slightly more than 50% of the survey respondents indicated that 16

17 they did not employ a legal secretary. For those who did, salaries ranged primarily from less than $25,000 to between $60,000 and $65,000. The median salary for legal secretaries was between $30,000 and $35,000. The level of experience among the legal secretaries employed by the respondents was varied, with the largest single group of those who did employ a secretary (22.5%) reporting that their secretaries had between 5 and 10 years of experience, while 19% reported that their legal secretaries had between 1 and 3 years of experience. There was a very small group (5%) who reported utilizing a legal secretary with less than one year of experience, and 12% reported that their legal secretary had more than 20 years of experience. Almost a quarter of the legal secretaries employed had over 15 years of experience, and 64% had more than 5 years. When analyzed by firm size, as one might expect, there was a trend toward a greater number of respondents from smaller firms having less experienced legal secretaries while respondents from larger firms tended to have more experienced secretaries, most likely reflecting a tendency by the secretaries to seek, and find, benefits with a larger firm as they gained experience. 17

18 Legal Assistants/Paralegals The respondents were also asked whether their organization employed legal assistants or paralegals, which was defined as an employee who performs legal tasks under the respondent s supervision which the respondent would otherwise perform. Fifty-seven percent (57%) did not, but 43% did. A negligible percentage stated that their firm or organization would only accept an undergraduate degree from a potential paralegal employee, while 4.3% said that they would only accept a certificate from a certifying organization. Twenty-one percent (21%) indicated that they would accept either. Forty-eight percent indicated that they had no standards that a potential paralegal employee must meet and one quarter (25%) stated that they did not know what their organization s requirements for legal assistants or paralegals were. Salaries for paralegals ranged from less than $25,000 to more than $80,000 per year, with around 45% of the respondents saying that paralegals in their organization made between $25,000 and $40,000 annually. The median salary range for paralegals was $35,000 to $40,

19 When asked for the average or standard hourly rate billed by their firm or organization for paralegal time, 36% responded that they were with corporate or government employers and did not bill for paralegal time. The two single largest groups of respondents (12.6% each) responded that they billed $40 or less and between $71 and $80, respectively, for paralegal time. Interestingly, almost 10% of respondents indicated that their firm billed paralegal time at more than $120 per hour. 19

20 The average number of billable hours produced by paralegals varied. The largest single group of respondents (24%) stated that paralegals in their organizations billed, on average, 500 or fewer hours per year; however, around 20% of respondents reported that paralegals in their organization billed between 501 and 1400 hours, and 16% indicated that their paralegals billed over 1400 hours, on average. The larger the firm size, the greater the number of reported billable hours by paralegals. Retirement Questions about retirement were asked of both working respondents and those who were already retired at the time they took the survey. Still working lawyers were asked if they intended to retire. Fifty-three percent (53%) indicated that they did while 47% indicated that they did not plan to do so. For those who did plan to retire, not surprisingly, age 65 was both the average and the median age anticipated for retirement, with the respondent planning for the earliest retirement striving to do so by age 30 and the two respondents planning for the latest retirement, citing age 90 as their retirement target. Fortunately, almost 61% of 20

21 respondents indicated that they have a funded retirement plan while a little more than 39% responded that they did not. Fifty-two percent (52%) of respondents plan to continue to do some type of work after retiring from the practice of law, while 48% do not. Respondents who were retired at the time they took the survey were asked how old they were when they retired. The median age of retirement for this group was 62.5 years. Unemployed Attorneys The survey also attempted to gather information on unemployed attorneys. At the time the survey was taken, of those who indicated that they were unemployed, the largest single group (40%) stated that they had been unemployed for more than 1 year. Twenty-six percent (26%) had been employed for 6 months to 1 year, 20% for 3 to 6 months and 14% for less than 3 months. The largest single group of the unemployed survey respondents (37%) indicated that they graduated from law schools outside of Alabama. For respondents who graduated from an Alabama law school, 20% of the unemployed respondents were Cumberland graduates, 14.3% each were University of Alabama School of Law and Thomas Goode Jones School of Law graduates, 11% were Birmingham School of Law graduates and 3% of the unemployed respondents had graduated from Miles Law School. Surprisingly, the unemployed survey respondents attributed their unemployment to the following causes: 37% unemployed by choice 20% inability to maintain a practice due to financial issues 17% other unspecified reasons 14% inability to find a job after law school 9% law firm layoff 3% inability to maintain a practice due to management issues 21

22 Survey Questionnaire and Responses The following information reflects the answers to the survey questions by all respondents without cross-tabulation to determine responses by sub-groups such as full time attorneys, part time attorneys, private practice attorneys or by age or demographics. General Income Information 1. How much did you earn (after deducting expenses if self employed) before taxes in 2009? Income Less than $25, % $25,001 - $50, % $50,001 - $75, % $75,001 - $100, % $100,001 - $125, % $125,001 - $150, % $151,001 - $175, % $175,001 - $200, % $200,001 - $250, % $250,001 - $275, % $275,001 - $300, % $300,001 - $350, % Over $350, % 2. Compared to 2008, did your income before taxes: Increase 38.8% Decrease 31.9% Remain the same 25.8% I don t know 3.5% 22

23 Current Employment 3. Which of the following best describes your CURRENT employment status? Full time (40 hours per week or more) 73.5% Part time (less than 40 hours per week) 12.5 Retired 6.3% Unemployed/Seeking a legal position 4.6% Unemployed/Seeking a non-legal position 0.9% Unemployed/Not seeking work 2.2% Firm Size and Areas of Law 4. How many lawyers are in your firm or organization? Just me 41.5% 2-5 lawyers 20.8% 6-10 lawyers 6.4% lawyers 2.6% lawyers 4.6% lawyers 3.3% More than 100 lawyers 11.5% N/A 9.2% 5. What are your primary practice areas (by billing if you were in private practice and by time expended if you are not in private practice? Choose up to 3. N/A 8.2% ADR/Mediation 1.3% Antitrust 0.5% Appellate 2.6% Banking & Finance 2.6% Bankruptcy 6.4% Commercial 3.9% Construction 3.1% Consumer Protection 1.5% Corporate 9.0% Criminal 24.7% Domestic & Family 26.5% 23

24 Environmental 2.8% General Practice 19.5% Health Law 1.5% Insurance Defense 4.9% Intellectual Property 1.8% Labor & Employment 5.1% Litigation (Civil) 22.1% Medical Malpractice 1.0% Products Liability 2.3% Pensions & Benefits 0.8% Personal Injury 9.8% Real Estate 13.4% Securities, Mergers & Acquisitions 0.5% Tax 2.6% Wills, Estates & Trusts 18.8% Worker s Compensation 3.1% Other 17.0% Other responses were: Government Municipal Juvenile GAL Federal privacy Social Security Disability Disability Benefits Compliance/Regulatory Prosecution School Law Nonprofit Public agency/natural Resources Judicial Elder Law Adoptions, Mental Health Cases Immigration Federal Procurement Oil & Gas Military law Energy Community Association law Access to Courts (civil) Traffic Landlord & Tenant 24

25 Retirement 6. Do you plan to retire from the practice of law? Yes 53.5% No 46.5% 7 At what age do you plan to retire. The median and mean age listed for planned retirement was 65 years. Responses ranged from a low of age 30 to a high of age Do you plan to do any type of work after retiring from the practice of law? Yes 52.2% No 47.8% 9. Do you have a funded retirement plan? Yes 60.7% No 37.3% Legal Secretaries 10. How much is the legal secretary who most frequently works for you paid? N/A I don t have a secretary 50.5% Less than $25, % $25,001 - $30, % $30,001 - $35, % $35,001 - $40, % $45,001 - $45, % $45,001 - $50, % $50,001 - $55, % $55,001 - $60, % $60,001 - $65, % $65,001 - $70, % $70,001 - $75, % $75,001 - $80, % Over $80, % 25

26 11. How many years of experience does that legal secretary have? Less than one year 4.7% 1 year 3 years 19.4% 3 years 5 years 12.0% 5 years 10 years 22.5% 10 years 15 years 17.3% 15 years 20 years 12.0% More than 20 years 12.0% Legal Assistants 12. Does your firm or organization employ legal assistants/paralegals? (Defined as an employee who performs legal tasks under your supervision that you as an attorney would otherwise perform.) Yes 43.0% No 57.0% 13. Does your firm or organization require that legal assistants/paralegals meet any standards or have a certificate? Yes We will only accept an undergraduate degree in paralegal studies. 0.6% Yes We will only accept a paralegal certificate from a certifying org. 4.3% Yes We will accept either of the above. 21.0% No 48.1% I don t know 25.9% 14. How much is the legal assistant who works for you most frequently paid? Less than $25, % $25,001 - $30, % $30,001 - $35, % $35,001 - $40, % $40,001 - $45, % $45,001 - $50, % $50,001 - $55, % $55,001 - $60, % 26

27 $60,001 - $65, % $65,001 - $70, % $70,001 - $75, % $75,001 - $80, % Over $80, % 15. What is the average or standard hourly rate billed by your office for legal assistants/paralegals? N/A Corporate or government employer 35.8% $40 or less 12.6% $41 - $50 4.0% $51 - $60 3.3% $61 - $70 7.3% $71 - $ % $81 - $90 2.0% $91 - $ % $101 - $ % $111 - $ % More than $ % 16. How many billable hours did legal assistants/paralegals average in your law firm or organization in 2009? N/A Corporate or government employer 39.3% 500 hours or less 24.1% % % % % Practice Setting 17. Which of the following best describes your CURRENT practice setting? Private Practice 68.3% Local, state or federal government/judiciary 12.9% In-house counsel 6.9% Legal aid/legal services 0.8% Non-legal employment 6.3% Other 4.7% 27

28 Other responses included: Education Construction claims avoidance and resolution None Special Member do not practice law in any jurisdiction Self-employed as freelance legal editor bi-vocational temporary employment looking for another job Military Paralegal Law school staff administration Federal non-attorney position Law clerk Billing Methods 18. Approximately how many cases did you handle in 2009? Less than % % % % % More than % 19. What is the primary method of billing used in your law firm or legal office? Hourly rate 46.7% Fixed or flat fee 18.1% Contingency fee 7.7% Value based fee (fixed fee plus bonus for results) 0.0% Combination of two or more of above 27.4% 20. What percentage of your cases are handled on a contingency fee basis? None 42.8% 25% or less 42.8% 26% - 50% 6.2% 51% - 75% 2.3% 28

29 Over 75% 5.8% 21. What is the average percentage of the award that you receive in contingency fee cases if you win? Less than 20% 4.8% 20% - 29% 14.3% 30% - 39% 70.1% 40% - 49% 10.2% 50% - 59% 0.7% 60% or more 0.0% Hours and Rates 22. Do you keep written time records? Always 50.8% Always, except in contingency or fixed fee cases 25.2% Only for selected cases 19.5% Never 3.5% 23 What system do you use to capture your time? None - reconstruct my time from calendar entries, file review, etc. 13.3% Paper time sheets 44.6% Computer time and billing software program 36.1% Other 6.0% 24. What time and billing software do you use? The two most frequent responses were Timeslips and QuickBooks. Other responses included: Abacus About Time Amicus Attorney Carpe Diem Client Profiles CMS Custom system DTE 29

30 Elite Excel spreadsheet Fanurio Juris LMS PC Law ProLaw RTG Bills RocketMatter Tabs 3 Time Matters Time Pro Timetrax Wheel 25. What minimum time interval do you use to record time? 5 minutes 4.9% 6 minutes (.1 hour) 62.2% 10 minutes 10.2% 15 minutes 16.7% 30 minutes 3.3% Other 2.8% Other responses included.15 hour,.2 hour, 3 minutes and depends on the type of case. 26. What is your average or standard hourly rate? Less than $ % $100 - $ % $125 - $ % $150 - $ % $175 - $ % $200 - $ % $250 - $ % $275 - $ % $300 - $ % $325 - $ % $350 - $ % $375 - $ % $400 - $ % 30

31 $425 - $ % $450 - $ % $475 - $ % More than $ % 27. Does your firm have a published minimum annual billable hours standard or requirement? Yes 12.2% No 87.8% 28. If you answered yes to question 27, what was your firm s published minimum billing requirement for associates in 2009? 1,000 hours or less 10.0% 1,001 1,200 hours 0.0% 1,201 1,400 hours 0.0% 1,401 1,600 hours 6.7% 1,601 1,800 hours 6.7% 1, hours 66.7% More than 2000 hours 10.00% 29. If you answered yes to question 27, what was your firm s published minimum billing requirement for partners/shareholders in 2009? 1,000 hours or less 11.5% 1,001 1,200 hours 0.0% 1,201 1,400 hours 0.0% 1,401 1,600 hours 11.5% 1,601 1,800 hours 26.9% 1, hours 38.5% More than 2000 hours 11.5% 30. How many hours did you bill in 2009? 1,000 hours or less 52.4% 1,001 1,200 hours 7.9% 1,201 1,400 hours 5.2% 1,401 1,600 hours 5.2% 1,601 1,800 hours 10.0% 31

32 1, hours 7.4% More than 2000 hours 11.8% Fee Agreements and Billing Statements 31. How often do you use a written fee agreement or retainer letter? Always 37.7% Usually 42.9% Seldom 15.1% Never 4.4% 32. What information do you regularly including in your billing statements to clients (Check all that apply.) Itemized list of services provided 89.7% Time spent by individual lawyers 66.1% Hourly rates of lawyers 68.2% Total time spent by lawyers 71.5% Hourly rates of legal assistants/paralegals 30.6% Time spend by legal assistants/paralegals 31.8% Total time spend by legal assistants/paralegals 30.2% Prior unpaid balance 64.9% Itemized list of disbursements 58.7% Remaining trust account balance 37.8% Narrative summary of activities/services 44.6% 33. Please indicate your average monthly accounts receivable balance for 2009: $1,000 or less 13.2% $1,001 - $5, % $5,001 - $10, % $10,001 - $20, % $20,001 - $30, % $30,001 - $40, % $40,001 - $50, % More than $50, % My firm doesn t prepare a report on this information. 35.5% 32

33 34. Excluding personal injury cases, on average what is the total amount of costs advanced on behalf of each client? (Examples: filing fees, service of process charges, long distance, court reporter charges, etc.) $0 We do not advance costs. 42.3% $1,000 or less 47.3% $2,000 - $4, % $4,000 - $6, % $6,000 - $8, % More than $8, % 35. Do you charge interest on past due fees? Yes 16.5% No 83.5% 36. Does your firm accept debit or credit cards for the payment of fees and costs? Debit cards only 0.4% Credit cards only 6.2% Both 14.5% Neither 78.8% 37. As of the end of 2009, please indicate what percentage of your accounts receivable were: 38. Approximately what percentage of fees billed in 2009 did you or your firm fail to collect? None 18.5% Less than 5% 24.5% 5 to 9% 20.8% 10 to 20% 19.0% 21 to 30% 9.7% More than 30% 7.4% 33

34 Position In Firm 39. Which of the following best describes your position within your firm: Sole practitioner 57.2% Firm owner with 1 or more associates 3.6% Partner/shareholder/member of multi-owner firm 21.6% Associate 14.4% Of counsel 3.2% Associate Attorneys 40. If during 2009 you or your firm hired a lawyer admitted to the bar in 2008 or 2009, what was the starting compensation for that lawyer? Less than $25, % $25,000 - $50, % $50,000 - $75, % $75,000 - $100, % $100,000 - $125, % More than $125, % N/A My office hired no associates in % 41. If your firm or legal organization employed an associate attorney in 2009, how was the associate compensated? Fixed salary only 11.4% Fixed salary plus year-end bonus 40.0% Fixed salary plus percentage of fees associate personally generates 1.4% Fixed salary plus percentage of firm s net income 0.0% of firm s gross income 1.4% Hourly rate multiplied by hours worked 1.4% Other 2.9% N/A My office had no associates in % 42. Does your firm plan to hire one or more associate attorneys (attorneys with less than 3 years practice experience) in 2011? Yes 30.6% No 69.4% 34

35 Overhead 43. Based on your firm s 2009 gross receipts, what percentage did you spend on (total should be 100%): See Narrative Summary for response to this question Fringe Benefits 44. Does your firm or organization pay for any of the following benefits for its lawyers? (Check all that apply.) Expenses for CLE courses 83.9% Professional membership fees 79.5% Flexible working schedule 37.6% Paid vacations 60.4% Paid holidays 59.7% Medical insurance for the attorney 41.9% Medical insurance for the attorney and family members 34.9% Paid sick leave 51.0% Client entertainment expense 27.2% Retirement fund contributions 42.3% Parking expense 16.4% Life insurance 32.6% Disability insurance 24.3% Dental insurance for the attorney 19.1% Dental insurance for the attorney and family 18.1% Car or car allowance 14.8% Club membership 7.7% Sabbaticals 0.7% 45. Does your firm or organization pay for any of the following benefits for non-lawyer employees? (Check all that apply.) Expenses for professional development courses 43.4% Professional membership fees 23.8% Flexible working schedule 40.4% Paid vacations 87.7% Paid holidays 88.5% Medical insurance for the staff member 48.5% Medical insurance for the staff member and family members 34.9% Paid sick leave 74.5% 35

36 Retirement fund contributions 47.7% Parking expense 14.9% Life insurance 28.1% Disability insurance 18.7% Dental insurance for the staff member 22.6% Dental insurance for the staff member and family 20.0% Car or car allowance 4.3% Club membership 0.4% Sabbaticals 0.4% Unemployed Attorneys 46. How long have you been unemployed Less than 3 months 14.3% 3 6 months 20.0% 6 months 1 year 25.7% More than 1 year 40.0% 47. From which of the following law schools did you graduate? Birmingham School of Law 11.4% Cumberland School of Law 20.0% Miles Law School 2.9% Thomas Goode Jones School of Law 14.3% University of Alabama School of Law 14.3% Other 37.1% Other responses included: Indiana University School of Law Loyola Law School Mercer University School of Law (JD)/Georgetown Law (LL.M. Tax) Mississippi College School of Law Texas Wesleyan University School of Law 36

37 48. Which of the following do you believe caused your unemployment? Inability to find a job after law school 14.3% A firm layoff 8.6% Inability to maintain a practice due to financial issues 20.0% Inability to maintain a practice due to management issues 2.9% Unemployed by choice 37.1% Other 17.1% Retired Attorneys 49. At what age did you retire? This question was asked only of attorneys who indicated in response to question 3 that they were retired. The average (mean) age of retirement for this subset of respondents was years, and the median age of retirement was 62.5 years. Demographics 50. How old are you? Under % % % % % 71 and over 3.3% 51. Are you: Male 63.9 Female

38 52. How do you classify yourself ethnically? African American 5.9% Asian 0.5% Caucasian 87.8% Hispanic 0.9% Native American 0.5% Other 0.9% I do not classify myself ethnically. 3.5% 53. How many years have you been admitted to practice law? Less than 3 years 14.5% 4 to 10 years 22.0% 11 to 20 years 24.1% 21 to 30 years 17.8% More than 30 years 21.5% 38

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