Vol. 29, No. 5
Just How Much Do Colorado Lawyers Earn?: The CBA 2000 Economic Survey
by Reba J. Nance
"How much do litigators earn practicing in Denver with five years of experience? "What is the average billing rate of third-year tax associates?" "What is the secretary-to-lawyer ratio in firms with more than thirty lawyers?" "How can lawyers find out if their overhead expenses are in line with other lawyers similarly situated?" "In what areas of the law are the majority of lawyers practicing?"
As Director of Law Practice Management for the Colorado Bar Association, I field telephone calls every day from lawyers asking questions such as these. In the past, I have not been able to provide accurate answers. Few surveys are currently available, and those that are can cost as much as $500 and may be difficult to understand. More important, they are not specific to Colorado. However, the Colorado Bar Association is now attempting to correct this problem. An economic survey is in the hands of a random sample of Colorado lawyers, and the results will be available in September 2000.
The survey should be helpful if you have ever been asked to justify an award of attorney fees at the conclusion of a case or tried to determine if you need to raise your hourly rate and do not have a clue where to look for guidance. The CBA 2000 Economic Survey results also will allow you to cite to the court the average hourly rate for lawyers practicing in your geographic location, in your practice area, and with your level of experience.
The 2000 Economic Survey sample was drawn from all Colorado attorneys, not only CBA members. The sample included every fourth name on the list of active Colorado attorneys in zip-code order and, therefore, is representative of the entire population of active, practicing lawyers. Those selected were provided with a self-addressed, stamped envelope in which to seal their anonymous responses and were asked to return them directly to Applied Statistics Laboratory, the company hired to tabulate the results. The Applied Statistics Laboratory has years of experience surveying lawyers and has previously completed surveys for the state bars of Kansas, Ohio, New York, New Hampshire, New Mexico, Florida, Ohio, Michigan, and Maine.
All responses to the questionnaire will remain anonymous. Colorado Bar Association officers and staff will not have access to the returned questionnaires, and the actual questionnaires will be destroyed after the results have been tabulated.
Survey Focus: The Economics Of Practicing Law
It is difficult to manage a practice, pay your expenses, and end the year with a profit if you have no idea how to price your services. Lawyers want to make sure that they are charging enough to cover their overhead, but not so much that they have priced themselves out of the market. Clients are more sophisticated today. They want competent legal representation at a fair price, which leads to comparison shopping. You cannot be competitive if you do not understand the market. The economics of practicing law is one of the hottest topics among lawyers. The CBA 2000 Economic Survey questions specifically address this issue.
In addition to questions about geographic area, age, gender, and number of years in practice, the survey covers specifics such as law firm overhead expenses and staffing ratios. Respondents are asked to place themselves in occupational categories such as sole practitioner, associate, partner, judge, and house counsel. More lawyers practice as "of counsel" and on a contract basis today, so these two categories are included as well.
Other questions address billing rates, percentage of uncollectible fees, amount of service charges on delinquent accounts, and time capture breakdown. Because more lawyers are switching to alternative billing practices, the questionnaire asks about the amount of work lawyers do on a flat/fixed-fee basis, as well as on contingency. Other subject areas include the amount of time it takes to collect fees, the last time the attorney’s billing rate was changed and by what percentage, and the rent paid for office space per square foot.
Therefore, the survey results will allow the CBA to prepare charts that will show the average income and expenses per lawyer as a percentage of receipts, distribution of income by number of years in practice and size of organization, average salary by geographic area, and hourly billing rates broken down by specialization and practice format (solo, associate in small firm, partner in a large firm, among others).
Moreover, firms that want to know the average salary for third-year associates will be able to glean this information from the survey results to determine what salary to offer an incoming associate. Paralegal salaries and billing rates also are covered so that firms can determine how much to charge their clients for paralegal support.
The CBA designed the questionnaire to strike a balance between asking the questions lawyers want to have answered and trying to keep the survey as short as possible. The questionnaire is three pages long and should take only a short time to complete.
The Final Report
The results of the survey will be available in September 2000 and will be comprehensive. An abbreviated report will be posted on the CBA website at www.cobar.org, and a summary of the results will be printed in The Colorado Lawyer. The complete printed report will be available at a nominal price; CBA members will receive a discount. Additionally, Applied Statistics Laboratory will be capable of sorting the data to answer specific questions, and, if the need arises, providing an expert witness who can testify on how the survey was designed and how the results were tabulated.
The CBA is committed to updating this economic survey frequently. The 2000 Economic Survey will serve as a benchmark for comparison with future surveys, which will help identify trends over time and should make future surveys even more valuable.
Survey Participants: We Need Your Help!
By the time you read this article, the 2000 Economic Survey questionnaires should have been mailed to a random sample of 25 percent of practicing Colorado lawyers. If you received a questionnaire, please take a few minutes to fill it out as accurately as possible and return it promptly. You will be helping yourself and the profession. The CBA requests that you do not put your name on it.
Even a well-drafted survey is worthless if the response rate is low. The more questionnaires that are completed and returned, the more valid the results. The CBA purposefully timed the mailing of the survey with tax season so the financial information would be more readily available. You may want to have your tax return close at hand when you fill in the questionnaire. Whenever possible, actual numbers are better than simply guessing. Again, the more accurate the confidential responses, the more helpful the final report will be to Colorado lawyers.
Every Colorado lawyer will benefit from the information collected and tabulated from the CBA 2000 Economic Survey. The final report of survey results will prove that your time and effort were wothwhile. If you have any questions about the questionnaire, please feel free to call Reba Nance at (303) 824-5320 in Denver; (800) 332-6736, toll free; or e-mail firstname.lastname@example.org.
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