Oregon State Bar Bulletin — AUGUST 2003

Briefs

PROFITS UP DESPITE UNCERTAIN ECONOMY
The newly released Altman Weil 2003 Survey of Law Firm Economics reports profits per equity partner in U.S. law firms were up by 9.8 percent in 2002. Profits per lawyer also registered a healthy up-tick, increasing 5.1 percent nationally. These results reflect a combination of increased revenue, lower overhead expenses and improved collections.

'Overall the results were surprisingly good for law firms in 2002 considering the state of the economy,' notes Altman Weil’s Bill Brennan. 'This is the result of law firms becoming more sophisticated in managing their practices since the last economic downturn of the early ’90s.'

Some highlights:

National average gross receipts per equity partner in firms of all sizes rose 3.6 percent in 2002 to $822,814. Gross receipts per lawyer in all firms were $371,607, up 2.2 percent from the previous year.

Average total overhead expenses (exclusive of lawyer compensation) per equity partner decreased slightly to $472,757, down by .6 percent. Overhead expenses per lawyer were $152,562, a 1.6 percent decrease from 2001.

Profits per equity partner were reported at an average $350,057 for all law firms in 2002, with profits per lawyer at $219,045. The most profitable practice area was intellectual property (equity partner averaging $544,349).

Equity partners charged a median 1,729 billable hours in 2002, while associates charged 1,869 billable hours. Lawyers in the largest U.S. law firms recorded the most billable hours, with equity partners at firms with over 150 lawyers billing a median 1,820 hours and associates in the same category billing 1,969 hours.

The median hourly billing rate for equity partners was $250 per hour and for associates, $170 per hour.

More information is available at (888) 782-7297 and at https://store.altmanweil. com.

RELAXING rules FOR OUT-OF-STATE LAWYERS
A California state supreme court committee has proposed new rules to ease and clarify the restrictions on out-of-state attorneys seeking to practice law in the Golden State.

The rules would allow four categories of out-of-state attorneys to practice law in California in certain circumstances: Under the proposal, in-house counsel and public interest lawyers living in California would be allowed, in limited circumstances, to practice law in the state without taking California’s bar exam.

According to the August 2003 issue of the California Bar Journal, such attorneys would have to be in good standing with another state bar, meet certain requirements and register with the California bar. They would be subject to California’s disciplinary rules and, in the first year, would have to fulfill the same minimum continuing legal education (MCLE) requirements that California lawyers must complete every three years.

In recent years, the Internet and other technological advances have created practice conflicts in California, and elsewhere, with rules that generally prohibit lawyers from practicing law outside the states in which they are licensed. California already has limited pro hac vice rules, but the new proposal would expand the practice to allow out-of-state attorneys to take depositions or to handle occasional transactional matters.

Read more at www.calbar. ca.gov, and click on California Bar Journal.

EMPLOYMENT FOR NEW LAW GRADUATES DOWN SLIGHTLY
A new study is reporting a decrease in the employment rate of new law graduates – the first such decrease since 1993. Some 89 percent of graduates (for whom employment status was known) found jobs after law school in 2002, according to the National Association of Legal Professionals.

The 2002 level of 89 percent employment compares with 90 percent for 2001 and 91.5 percent for 2000, and according to the report is evidence of the effect of the general economic downturn on the employment market for new law school graduates.

The recent drops notwithstanding, in the last five years the employment market for new law school graduates has remained relatively strong, standing at or above an 89 percent employment rate. This contrasts with the early and mid-1990s, when employment rates were in the 84-85 percent range.

Additionally, the report says the median starting salary for all full-time jobs rose from $55,000 for the Class of 2001 to $60,000 for the Class of 2002. For the first time since 1996, the median starting salary at law firms did not increase, remaining at $90,000. Medians for public service jobs increased by $1,000-$2,000. As a result, for the first time since 1996, the differential between private and public sector salaries did not widen.

A total of 175 ABA-accredited law schools responded to the survey, providing employment information on 91.5 percent of all graduates of the Class of 2002.

Other findings:

—Of the graduates for whom employment status was known, 75.3 percent obtained a job for which bar passage is required. An additional 5.2 percent obtained jobs for which a J.D. degree is preferred, or may even be required, but for which bar passage is not required.

—As in all prior years that NALP has collected data, the most common employment setting was that of private practice within a law firm. Of graduates known to be employed, 58.1 percent obtained their first job in a law firm. The percentage of graduates employed in private practice has fluctuated only between 55 percent and 58 percent since 1993 and is well below the high of 64.3 percent for the Class of 1988.

—Public service employment, including government jobs, judicial clerkships and public interest positions, accounted for 27 percent of jobs taken by employed graduates, slightly lower than the 27.6 percent figure for the Class of 2001.

A summary of the report can be found at http://www.nalp.org/press/jjd02.htm. To order the report, contact NALP by e-mail at info@nalp.org or by phone at (202) 835-1001.

MEDIUM-SIZED FIRMS: HOW THEY CAN SURVIVE
The current economic climate may be more hazardous for midsize law firms than the giant firms and the smaller legal shops that surround them. Dozens of big-name, well-established midsize firms that had been in business for more than a century have dissolved in recent years. Many firms like them that had been around for much shorter periods have also closed due to growing competition and economic pressures.

These were the conclusions in a July 2003 article, 'Caught in the Middle,' in the ABA Journal. The article examines reasons mid-size firms have struggled for survival, and focuses on the development of niche practice areas as a means for these firms to revitalize and thrive in the competitive environment.

According to the Journal, the key to defining a midsize firm may be a matter of perspective more than numbers. In larger cities such as Chicago or New York a midsize law firm may have anywhere from 50 to 400 lawyers, whereas in a smaller metropolitan area such as Kansas City, Mo., a midsize firm might number only 25 lawyers.

The article explains that midsize firms fill the gap between the nation’s largest national and international firms, which offer concentrated services in tightly carved-out practice areas, and small general firms that primarily serve individuals and small businesses. In effect, midsize firms are the only firms in competition with everyone.

Midsize firms not only have suffered during the country’s economic downturn, but also have found it increasingly difficult to compete with smaller general practice firms representing individuals in divorce, personal injury suits, real estate and other cases that have helped pay the bills, according to the Journal. Midsize firms can’t duplicate the lower fees those competitors offer because they have to deal with the overhead costs of trying to keep up with big firms.

The Journal explained that there are risks involved with implementing a niche strategy. A firm can often become vulnerable if its niche field becomes too competitive, or if business dries up due to changes in the business climate.

 


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AND FIDO, TOO

Pets are part of the family, and a growing number of states are recognizing that they deserve legal protection. Twenty-two states, including Oregon, have passed pet care trust laws. Individuals concerned about becoming unable to care for their pets because of injury, illness or death now have the legal means of ensuring the well being of animals they consider family members.

In response to years of requests by lawyers and others asking how to properly plan for a pet in a will or trust, the Humane Society of the United States has created a kit called 'Providing for Your Pet’s Future Without You.' To educate estate planning professionals and pet owners, the society offers this free kit, complete with a six-page fact sheet, wallet alert cards, emergency decals for windows and doors and caregiver information forms. The fact sheet discusses not only wills, but also trusts and powers of attorney, and includes sample pet-care language for estate-planning documents.

Contact the Humane Society at (301) 258-3130 or www.humanelegacy.org to request a free copy of the kit.