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Bloated is not, generally speaking, a good word. It feels uncomfortable at that time of the month, it sounds awful when we’re talking about corpses, and it’s downright terrifying for associates when law firms start talking about it in terms of their headcount.
A survey conducted by Wells Fargo’s Legal Specialty Group found for the first six months of 2023, headcount is up in the legal sector, but productivity is down. Survey participants include 130 firms, including 66 Am Law 100 firms, and they said lawyer headcount is up 3.9 percent but demand is down, leading to a decline in productivity to the tune of 4.1 percent. Though, at the moment, layoffs and associate deferrals seem limited, with most firms opting to wait out the demand drop.
Owen Burman, a senior consultant at Wells Fargo, said when it comes to billable hours, “We’ve never seen numbers this low.” The survey found an annualized pace of just 1,538 billable hours per lawyer. Last year’s survey results saw average billable hours of 1,688, which was a high water mark. However, this year’s billables are also down from the 1,631 average in 2019 and 2018.
Overall, participating firms saw an uptick — 4.4 percent — in revenue. With demand down, this has come from an increase in billing rates. According to the report, it is “some of the highest growth in billing rates we’ve seen, 7.7% overall.”
For associates’ sake, this will hopefully provide the cushion firms need to weather the historically low productivity.
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Mastodon @Kathryn1@mastodon.social.
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