The latest in Wolters Kluwer ELM Solutions’ LegalVIEW® Insights report series is now available. Volume 4 is a deep dive into understanding how outside counsel firms staff legal matters and the impacts of those staffing patterns. The full report offers valuable data on, for example, which outside counsel attorney roles typically bill the most significant number of hours on various types of cases and in firms of different sizes. This blog post will highlight a few of the key findings included in the report.
The size of a firm has an impact on its staffing ratios
Generally speaking, the larger the firm is, the fewer partner hours they bill. At the largest firms, the Am Law 1-10, eight out of 10 firms billed a median of only 20-40 percent by partners. In contrast, at the Am Law second hundred, partners billed more hours than associates; 67 percent of firms in this tier generate the majority of their billings through partners, and 16 percent of them generate 80 percent or more through partners.
This observation is not surprising, given that larger firms employ far more associates than smaller firms do. It is something for in-house legal professionals to keep in mind, however, so that they can set reasonable expectations around staffing for individual matters and ensure their firms’ matter staffing continues to be effective.
Even within a firm, staffing ratios can vary substantially from year to year
Our study found that when analyzing staffing ratios over time across the entire industry, they remained fairly steady. There were no large fluctuations in how law firms staffed matters at the market level over the six years we studied. However, this was far less true when looking at individual law firms. During our analysis period, 38 percent of firms showed a maximum YoY variation between 10 and 20 percent.
In most cases, this level of variation is probably healthy. Demand for legal work varies over time, with more or less costly services rising and dropping in necessity with various matters and events. It is reasonable for staffing ratios to go through similar changes. However, legal departments should watch for extreme fluctuations, which could be a sign of a firm changing its approach or decreasing its efficiency. If a firm’s ratios over time remain unusually flat, on the other hand, it may indicate that they should give more consideration to staffing when planning their individual matter strategy.
Litigation type is a strong driver of staffing ratios
The type of work required on a matter naturally has an impact on how it is staffed, and one might expect that litigated matters, as a group, would have similar ratios. Our analysts found that this was not the case, however. As an example, 23 percent of hours in general liability litigation were billed by paralegals, but paralegals represent only 4 percent of environmental litigation hours. In corporate litigation, partners billed 32 percent of hours, but in real estate litigation, they billed 58 percent of hours.
It is important for corporate legal departments to understand the typical staffing ratios for various kinds of legal work for which they engage outside counsel. This knowledge gives in-house legal staff benchmarks against which to compare staffing patterns on their matters. If they find staffing ratios that differ dramatically from the norm, there could be good reason for it. But it’s possible this could be an indication of inefficiency that presents an opportunity for improved cost control.
For more insights into law firm staffing of legal matters, as well as graphs with more detailed data on the findings, download LegalVIEW Insights volume 4: Statistical differences in law firm staffing ratios. And be sure to visit the LegalVIEW Insights page for access to volumes 1-3 of the report series, along with more data-driven analysis of the legal industry.