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    The Economics of Practicing Law: Sidebars

    The State Bar's Economics of Law Practice Survey gives you the comparative data you need to size up your business practices in key areas: time usage, billing methods, overhead, collections, and more.

    Dianne Molvig

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    Wisconsin LawyerWisconsin Lawyer
    Vol. 79, No. 2, February 2006

    Hours Per Week Engaged in Specific Activities

    Activities Mean Hours Median Hours % Responding
    Billable legal work 35 35 89%
    • based on hourly rate
    25 25 53%
    • based on flat/fixed rate
    13 10 29%
    • based on contingency work
    14 10 23%
    Office Administration 6 5 57%
    Marketing 4 2 29%
    Unbilled public services 5 3 34%
    Non-legal employment 17 10 12%
    Total Hours in Week (from above) 42 42 92%
    CLE hours per year 22 20 80%
    Pro Bono hours per year 55 30 57%

    Full Report Provides Detail

    The full 2005 Economics of Practice Survey Report is available. Apply your own data to learn how your firm stacks up to those of your colleagues in personal income, billing practices, hourly rates, overhead expenditures, support staff salaries, and more. For instance, compare your firm's data to these noteworthy results:

    • Personal income. The median net income for all respondents is $88,000. The mean net income of $108,358 varies considerably when comparing practice locations. The full report breaks down personal income figures by a variety of factors in addition to practice location including principal position, field of law, years in practice, gender, and firm size.
    • Hourly rates. The average hourly billing rate is $171; the median is $165. The full report breaks down hourly rate figures by a variety of factors in addition to field of law including principal position, office location, years in practice, and firm size.
    • Fee billing. Nearly four in 10 respondents use contingency fee billing. The full report includes typical flat fees charged for such services as preparing simple wills, directives to physicians, deeds, powers of attorney, and articles of incorporation/association, handling traffic tickets, and more.
    • Overhead expenditures. In 2004, respondents' average overhead expense was $87,191 per attorney, with a median of $66,950 per attorney. Average estimated gross receipts per attorney was $183,103, with a median of $168,000. The full report breaks down overhead expense and gross receipts by a number of factors such as by gender and by firm or office size.

    The Economics of Law Practice in Wisconsin - 2005 Survey Report is available for purchase by members for $39.95. Nonmembers may purchase the report for $99.95.

    To order the report:

    Personal Volume of Work

    Insufficient to keep you busy 12%
    All you can handle 58%
    More than you prefer to handle 30%

    Percent of Fees Billed That are Uncollected

    1-4% 27%
    5% 23%
    6-10% 23%
    More than 10% 27%

    Total Unreimbursed Expenses Per Attorney

    Salary and fringe benefits of all non-lawyer personnel (n=255) Mean $48,526 Median $35,000
    Rent, phone, utilities (n=296) Mean $16,377 Median $12,000
    All other non-salary expenses (n=283) Mean $33,538 Median $22,365
    Estimated total overhead expenses (n=314) Mean $87,191 Median $66,950

    Survey Methodology

    Constructing an unbiased sample. When reviewing survey results, it's wise to remember one simple rule: A biased sample will produce biased results. It is the goal of every legitimate survey researcher to construct unbiased samples. While completely excluding all bias is almost impossible, several measures can be taken to reduce sampling error.

    A sample should accurately reflect the target population. In this case, the target population was all attorneys in Wisconsin who were identified in the State Bar of Wisconsin membership database as having active status. Due to time and budget constraints, it was necessary to choose a smaller, representative sample that would reflect the larger population of attorneys. To ensure appropriate geographical representation, the sample was stratified, or subgrouped, into six regions based on county. The total sample numbered 3,000 attorneys.

    Looking at the responses. A total of 752 usable questionnaires were returned for a 25 percent response rate. Respondents represent a variety of practice types including private practice, government agencies, the judiciary, in-house counsel, and those working in legal aid or as law clerks. The survey maintains a 95 percent confidence level, with an error of estimation of plus or minus 3 percent.

    All survey researchers hope for a high response rate, although there is no "standard." A 25 percent response rate is typical of what the Bar has been seeing when surveying attorneys, who have increasing demands on their time. The somewhat sensitive nature of the survey topic also may have contributed to the response rate. It is important to realize that 25 percent, in this case, reflects the input of more than 750 Wisconsin attorneys.

    When evaluating response rates, the main question is: "How closely does the sample match the rest of the target population?" One way to get a handle on this is to compare the demographic attributes of survey respondents with those of the target population as a whole. Regardless of the sample size, the potential for nonresponse bias is a reality. So what's the best advice? Take survey results for what they are. Pay attention to survey methodology and review results with a critical eye.

    How Often Office Charges Clients for Various Expenses

      Mean Always Usually Sometimes Rarely Never
    Time spent on telephone calls (n=514) 1.7 54% 32% 7% 3% 4%
    Lawyers' travel time (n=514) 2.2 32% 36% 20% 6% 6%
    Lawyers' travel costs (n=512) 2.3 34% 30% 15% 11% 10%
    Duplicating/photocopying expenses (n=512) 2.8 18% 29% 20% 18% 15%
    Postage (n=512) 3.0 20% 19% 24% 20% 17%
    Paralegal/legal assistant time (n=497) 3.0 21% 25% 19% 9% 26%
    Computerized legal research costs (n=511) 3.2

    17%

    21% 19% 15% 28%
    Other computer time or services (n=486) 4.0 6% 9% 13% 27% 46%
    Secretarial time or services (n=502) 4.1 4% 7% 15% 22% 52%



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