Statistics for the Legal Market

Compiled by Margaret Grisdela, President of Legal Expert Connections, Inc. This article is an excerpt from her new book “Courting Your Clients: The Essential Guide to Legal Marketing.” She can be reached at 866-417-7025 or mg@legalexpertconnections.com.

There are over 1.1 million licensed attorneys in the United States, according to the American Bar Association (ABA). Approximately 42,600 new lawyers emerged from the nation’s 191 ABA-approved law schools in the academic year 2005-2006.

Where do all these attorneys practice law? The vast majority–74% in the year 2000–end up in private practice, according to ABA research. Most attorneys in private practice (70%) work in a law firm with ten or fewer attorneys. In fact, a solo practice is the career and lifestyle choice of almost half (48%) of private legal practitioners. Only 14% of attorneys work in firms of over 100 lawyers, according to the ABA.

Looking at the legal market in terms of the number of law firms, there were 47,563 law firms serving the U.S. in the year 2000 according to the American Bar Foundation. Just over three-quarters (76%) of law firms have five or fewer attorneys, and an additional 13% employ six to ten attorneys. Only about 1,000 law firms consist of 40 lawyers or more, according to ALM Properties, Inc.

Lawyer offices (defined as the primary component of NAICS code 5411) generated $170.8 billion in 2002 revenue, according to the U.S. Census Bureau. In an industry where profits per partner routinely exceed $1 million for top tier firms, according to The American Lawyer published by ALM Properties, Inc., the law is big business.

While it may be hard to imagine, U.S. residents filed over 100 million new lawsuits in state courts in the year 2003 alone, according to the National Center for State Courts (NCSC). The majority of these lawsuits (54.7 million) involve traffic matters, followed by 20.6 million criminal cases. Not all attorneys handle litigation, but those who do have plenty of work to keep them busy.

Median starting salaries for first-year law firm associates range from $67,500 for firms of 2-25 lawyers, to $125,000 for firms of more than 500 lawyers, according to a 2005 survey by the National Association for Law Placement (NALP). 2007 starting associate salaries are moving into the $160,000 range in some major markets. The U.S. Bureau of Labor Statistics reports that the mean annual wage for lawyers is $110,520.

While the law can be a lucrative career, it is expensive to become a lawyer. The 2005 average annual private law school tuition was $28,900, according to the ABA. Public law schools averaged $13,145 per year for residents and $22,987 for non-residents during the same school year.

As you might expect, many law school students find it necessary to borrow money in order to finance their legal education. The NALP determined that 94% of law graduates responding to a 2002 survey borrowed a median of $84,400, excluding undergraduate loans, to finance their legal education.

Once in private practice, the need for attorneys to establish and maintain high quality client relationships is of the utmost importance.

Law firms employ one full-time marketing person for every 30-40 attorneys, on average. Marketing staff size will vary depending on the type of legal practice, number of years in business and other factors. The average law firm marketing budget spent on promotional campaigns is approximately 2% of gross revenue (excluding marketing staff compensation and benefits), according to the legal consulting firm of Altman Weil, which publishes an annual Survey of Law Firm Economics.

The 2006 “Law Firm Business Development Practices Survey,” conducted by ALM Research^TM in conjunction with The Brand Research Company, reports that more than one-third of the 157 large law firms surveyed have a business development budget of over $1 million. Almost two-thirds of the firms surveyed added business development staff in the past year. This is your competition, and you need to be prepared with a focused marketing plan that will increase your visibility and make you the attorney or law firm of choice.

The book “Courting Your Clients: The Essential Guide to Legal Marketing” outlines many ways that you will be able to increase your business development skills at any point in your career, whether you are a new law school graduate or a seasoned professional.