Over a period of three weeks during June 2011, the Colorado Bar Association (CBA) conducted a survey of the Colorado legal community related to the economics of law practice in the state. Survey questions pertained to activity in 2010 and were based on questions asked in previous CBA economic surveys that also had been created, in part, by the CBA Law Practice Management Department. The survey was sent to all CBA members.
The CBA is grateful to the 1,771 members who participated in the 2011 survey. The CBA invites members to review the entire report, which can be viewed here.
Design of the Economic Survey
The CBA Economic Survey was divided into two parts. The first part studied incomes and work statistics of responding attorneys. The second part sought practice information from practice administrators and those who may not carry that title but who manage the day-to-day operations of smaller practices.
The survey tracked attorney income by location, practice size, type of practice, years in practice, and age of member. This summary generally discusses survey results in these categories. Also, because the CBA was able to factor in data from two previous economic surveys, it was possible to compare information over an eleven-year period.
Attorney income has increased since 2007 in all except one of the eleven practice locations. Metropolitan Denver (excluding downtown Denver) had a slight decrease in income (.3%); all other geographical areas in Colorado show an increase of annual income (ranging between 1.7% and 5.8%). The greatest increases in income occurred in Pueblo, El Paso, Larimer, and Weld Counties. Attorneys in downtown Denver recorded the highest income.
Practice and Work Habit Trends
Working trends were tracked in some detail. Again, data that had been collected in three surveys (and eleven years) were studied. The following trends occurred over the eleven-year time frame:
- hours worked are up—not for everyone, but for enough firms to affect the average
- hours billed are down—showing a significant decrease since the last survey
- pro bono hours are up across the board
- full-time and part-time nature of the work force is unchanged
- the pay gender gap has narrowed and is partially explained by wide differences in years in practice between men and women
- there is little employee pay growth; compression is evident
- charged rates have not changed significantly
- hourly billing still is the most common practice, with one-third of responding firms offering contingency billing
- age of the work force has not changed significantly, but rate of new employees entering the work force exceeds retirement rates
- marketing practices vary by firm size, but developing referrals is the most important initiative, and firms of all sizes are focusing on this
- credit card payments are accepted among large firms (36.9% of all firms report accepting them).
Financial Results and Trends
Firms of all sizes report good profits: 72.2% (of the firms) report an increase in profit (of 5% or more) in calendar year 2010 over calendar year 2009.
- 41% of firms report that business has increased “during the last two months,” and only 15% report diminished business during this period
- 56% of firms report that they have undertaken some cost-cutting, but only 7% report payroll cuts
- non-attorney labor was pegged between 13% and 16%; some larger firms are driving down attorney labor costs by investing in support personnel to keep attorneys doing legal work
- receivables do not appear to be a significant problem, but smaller firms are taking longer to collect—21% of receivables are collected over ninety days
- realization rates vary with firm size, but generally are good.
Attorney incomes are growing, firms are showing a good level of profitability, and revenues are either staying the same or showing recent growth. Overall, the statistics in this study paint a very positive picture of the economics of law practice in Colorado. The CBA is pleased to provide this information to its members.
Reproduced by permission. ©2011 Colorado Bar Association, 40 The Colorado Lawyer 25 (September 2011). All rights reserved.
The Colorado Lawyer, the official publication of the Colorado Bar Association, serves as an informational and educational resource to improve the practice of law. When you see the logo, you’re reading an article from The Colorado Lawyer. CBA members can also still read the full issue online at cobar.org/tcl.