Business of Law

Firms' revenues come increasingly from representing businesses, not individuals, census shows

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Stack of money

Law firm revenue for business representation grew between 2007 and 2012, but it decreased for consumer representation, Bill Henderson explains in a Legal Whiteboard post.

The Indiana University Maurer School of Law professor examined the U.S. government’s Economic Census data, which is released every five years and includes customer types for specific industries. In 2007, law firms reported that 66.1 percent of revenues came from businesses, while 29.1 came from individuals. In 2012, according to Henderson’s post, 70.8 percent of law firm revenue came from businesses, and 23.9 percent came from individuals.

Revenues for lawyers grew between 2007 and 2012, Henderson notes, from $225 billion to $246 billion.

“However, when we run the numbers, the total receipts for lawyers serving people declined from $65 billion to $59 billion,” he writes. “That is a relatively large absolute decline in just five years. It suggests an actual contraction in the amount of legal work for people. Yet during this same period, the nation grew from 288 million to 302 million people.”

Henderson suspects that 2017 census data will show a further decline in revenues for consumer representation. He mentions businesses like LegalZoom and RocketLawyer, as well as declining incomes among the middle class.

“It is possible that the archetypical images of private practice lawyers are becoming more and more out-of-sync with what is happening in the actual market,” he writes. “For those creating law school curricula or setting policy around access to justice, we are going to need new mental models of what it means to be a lawyer.”

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