Lower Billable Averages Suggest More Staff Layoffs Ahead

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A cut in average billable hours may sound like a good thing for overworked lawyers, but it portends more staff layoffs, according to banking experts.

Average hours per lawyer so far this year are in the low 1,600s, compared to averages of 1,700 to 1,800 hours from 2000 to 2007, according to reports by Citi Private Bank and Wells Fargo Wealth Management. Unless law firms see substantial increases in revenue or productivity, they will likely cut more support staffers, experts from both organizations told the New York Law Journal.

The cuts have already begun. Howrey laid off 32 staffers this month, followed by DLA Piper, which didn’t disclose how many were cut. Stay tuned, says Jeffrey Grossman, national managing director in Wells Fargo’s legal specialty group. “You’re going to see more cuts in terms of staff,” he told the New York Law Journal.

The NYLJ summarized other findings:

• Law firms nationally have seen flat growth in gross revenues. But firms in New York and California have done better, posting revenue increases of 5 percent to 6 percent, Wells Fargo says. Grossman says the markets that are seeing the upswings are the ones that had significant downturns, so their improved results represent a rebound rather than real revenue growth.

•Net income is up about 10 percent because of layoffs and other expense reductions, Wells Fargo says.

• Out of the nation’s top 200 firms, those ranked 50th to 100th are suffering more of a decline in demand, according Dan DiPietro, chairman of Citi’s law firm group, in an article for the Am Law Daily he co-wrote with Citi’s senior client advisor Gretta Rusanow. These firms “may be getting squeezed,” they write, by smaller firms able to offer better rates and larger firms “going down-market.”

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