|By Kalpana YalamanchiliThe recently completed triennial study of the economics of law practice may signal an optimistic outlook for Ohio lawyers.1 Trends in attorney income, billing rates, time expended and compensated, economic sentiment and the degree of job satisfaction all seem to indicate that Ohio lawyers are more optimistic about the economics of the practice of law than they were at the time of the previous study in 2010. While many of the upward trends discussed below are very small and may have just kept up with the rate of inflation, they are nevertheless moving upward. It should also be noted that the respondents in the study are generally at the mid-level of their practice years.
The Ohio State Bar Association Solo, Small Firms and General Practice Section has sponsored the triennial study of the economics of law practice in Ohio since 1990. The OSBA retained an independent consultant, experienced in statistics, to conduct the survey and to analyze the data collected. The study serves as a guide for Association members as they plan and manage their professional lives. The study is not intended for use in setting minimum, average or maximum attorney fees or salaries. It is intended for use as one of several resources in determining law office best practices and policies.
A comparison of the data from the 2013 study with previous studies determines certain trends.
Trends in income2
While the 2013 study divided the survey instrument among three categories of lawyers (private practitioners, government lawyers and house counsel), weighted averages are reported for net income. The median 2012 net income for respondents working full and part time is $95,872 (up from $84,000 reported in 2009, and $85,000 reported in 2006 for all respondents).
The median 2012 net income reported for respondents working full time is $96,173 (up from $90,000 in 2009). For male attorneys working full time, the median net income for 2012 was $114,520 (up from $100,000 in 2009 and in 2006). For female attorneys working full time, the median net income for 2012 was $78,841 (up from $74,000 in 2009 and $70,000 in 2006).
Trends in billing rates
The reported median hourly billing rate for all respondents is $207 (up from $200 in 2010). The median hourly rate reported by male attorneys working full time in 2013 is $225 (compared to $200 in 2010, and $190 in 2007) while female attorneys working full time reported a median billing rate at $200 (compared to $195 in 2010, and $175 in 2007).
Trends in time expended and compensated
The median number of hours of compensable or billable work time expected of all respondents working full time in 2013 is expected to be 35 hours per week (compared to 34 hours per week in 2010, and 35 hours/week in 2007). The median number of actual hours expected to be worked by all respondents working full time in 2013 is expected to be 50 hours per week (compared to 50 hours per week in 2010 and in 2007). The median number of hours of compensable or billable time expected of male attorneys working full time in 2013 is 35 hours per week (unchanged from 2010 and 2007). The median number of work hours expected of male attorneys working full time in 2013 is 50 hours per week (unchanged from 2010 and 2007). The median number of hours of compensable or billable time expected of female attorneys working full time in 2013 is expected to be 34 hours per week (compared to 33 hours per week in 2010 and 35 hours per week in 2007). The median number of work hours expected of female attorneys working full time in 2013 is 48 hours per week (compared to 45 hours per week in 2010 and 50 hours per week in 2007).
Trends in economic sentiment with the practice of law
Attorneys were asked about their perceived current economic status in 2013 compared with 2012. Approximately 46 percent of the respondents believed that their economic status will be the same as the previous year, while more than 24 percent believed that it will be better, and 23 percent thought it would be worse (compared to 2010 when 42 percent expected their economic status to remain the same as 2009, while 23 percent believed it would be better and 34 percent thought it would be worse).
Respondents were also asked about their perceptions of their economic status for the next two years. Approximately 40 percent expect things to remain the same while more than 38 percent thought their economic status would be better and a little more than 13 percent expected things to be worse (compared to 2010 when 35 percent expected things to remain the same, 42 percent expected to be better and 14 percent expected things to be worse). There was only a small difference in the percentage of respondents who were unsure (9 percent in 2010 and 8.7 percent in 2013).
Trends in degree of job satisfaction
Respondents were asked about their degree of job satisfaction in terms of current levels as well as in the near future. A little less than half of lawyers in private practice, 48.6 percent, reported that they derived a great deal of satisfaction in their current job or practice area. For those in house counsel positions, this level of job satisfaction was reported by 49.3 percent of respondents. Government lawyers reported the highest degree of job satisfaction at 67.3 percent.
When asked about the degree of job satisfaction in the near future, 59.7 percent of private practitioners expected to remain at their current level, while 15.5 percent expected to find their job more satisfying, and 17.6 percent thought it would be less satisfying. The great majority of house counsel (62.7 percent) responded that they expect to have the same level of job satisfaction, while 23.2 percent expected to find their job more satisfying and less than 1 percent thought it would be less satisfying. For government lawyers, 70.8 percent expect their job satisfaction level to remain the same, while 16.9 expect to be more satisfied, and 8.4 percent thought it would be less satisfying.
In 2010, the responses from all job classifications indicated that 50 percent of lawyers derived a great deal of job satisfaction, while 41 percent indicated some satisfaction and, 9 percent indicated very little satisfaction. When asked to predict their job satisfaction level for the near future, 64 percent of the respondents in the 2010 study thought that their degree of satisfaction would remain the same, while 17 percent hoped it would be more satisfying and 13 percent expected it to be less satisfying.
While the trends in the above noted categories may be cause for optimism, other findings indicate that the great recession’s effect on the legal profession is still very much in evidence and will remain so for the near future.
Jobs and compensation
Respondents were asked about compensation and hiring plans or expansion of jobs in 2013. About 77 percent noted that new lawyer offers were unlikely (compared to 11 percent who thought they were likely or very likely), and 55 percent indicated that lawyer salary increases were unlikely (compared to 11 percent who thought they were likely or very likely). As to lawyer bonuses, 64 percent thought they were unlikely to be offered (compared to 15 percent who thought they were likely or very likely).
Law school debt
For the first time, the study sought information on law school and other educational debt of Ohio lawyers. For lawyers in practice for two years or less, the median accumulated law school debt was $100,000; for lawyers between three to five years of practice, it was $90,000; for those between six to 10 years of practice, it was $60,000. Those in practice more than 36 years (admitted prior to 1977) reported that debt to have been $7,000.
The current monthly payment for lawyers in practice for two years or less is a median of $643; for those in practice between three to five years, the median payment is $775; for those between six to 10 years of practice, it is $544. As to the number of years of payment remaining, the median reported was 18 years for those in practice for five years or less. Loan repayment terms ranged for 10 to 30 years.
Kalpana Yalamanchili is the OSBA director of bar services. She oversees the work of 42 committees and sections, the lawyer and paralegal certification programs, and OSBA special projects. She also serves as the primary liaison to metro/local bar/affinity bar associations.
1 The study is available to members of the Association at www.ohiobar.org/2013econstudy.
2 Net income represents 2012 values and is defined as all personal income from legal work (after expenses) or salaries from the practice of law, before taxes. All other data represent 2013 values.