On a nationwide basis, major law firms employ one associate for every partner, and the overall ratio of lawyers to partners is just over 2.0 (2.19). This is according to recent analyses of the 2006-2007 NALP Directory of Legal Employers, the annual compendium of legal employer information published by NALP. The 2006-2007 Directory represents over 132,000 lawyers in more than 1,500 law offices nationwide, primarily, though not exclusively, in firms of more than 100 lawyers. The analyses reveal that, whether measured as the ratio of all lawyers to partners, as the ratio of associates to partners, or as the ratio of other lawyers, e.g., of counsel, senior and staff attorneys, to partners, law firms vary widely in their mix of lawyers.
What is more, on a national basis, these figures in the two most recent years have returned to levels of the mid 1990s, after experiencing an increase in the late 1990s and peaking in 2000. (See Table 1.) While the fluctuation in these figures is obvious, the reasons for the fluctuation are less so.
Not surprisingly, regardless of the measure used, on average, larger law firms leverage their partners with associates and other lawyers to a greater degree than do smaller firms. For example, the ratio of associates to partners in firms of 100 or fewer lawyers is about 0.7. Leverage figures rise rapidly for firms of 251 or more lawyers. In firms of more than 700 lawyers, the figure is about double, at 1.38. A measure based on all lawyers shows a similar progression, from 1.86 to 2.60. (See Table 2.)
City averages for leverage vary from city to city. Among the cities with the greatest representation in the Directory, lawyer/partner ratios ranged from a low of about 1.6 in Grand Rapids and Milwaukee, to a high of 3.16 in New York City. A number of cities, including Detroit, New Orleans, Minneapolis, Portland, OR, Seattle, and Tampa/St. Petersburg, are similar to Grand Rapids and Milwaukee, with leverage in the 1.68 to 1.75 range. On the high end, however, only San Jose comes close to matching the leverage levels of New York City firms. Most of the other cities are not too far from the national average of 2.19.
Likewise, only in New York City does the ratio of associates to partners begin to approach 2.0 (1.86). San Jose is second at 1.64. The list bottoms out at less than 0.5 in Detroit and Grand Rapids. This measure of leverage is less than 1.0 in a number of cities.
States, or portions of states outside of the cities listed, also vary. Thus leverage is highest in Nevada and lowest in areas of New York state outside of New York City.
Since leverage is generally higher in larger firms, differences between cities reflect to some extent differences in size composition. However, similarities with respect to firm size don’t necessarily translate into similar leverage figures. For example, when you look at cities with a similar percentage of offices from firms with more than 250 lawyers, such as Dallas, New York, Kansas City, Los Angeles, Orange County, Pittsburgh, and Raleigh/Durham, leverage levels are very different, ranging from just under 2.0 in Pittsburgh, to 3.16 in New York. Thus, while this information is among the most comprehensive available, it does not readily provide insight into other factors that likely play a role in determining the leverage decisions of an individual firm, nor the reasons for the averages in a given area. However, these figures do provide a useful description of the current application of leverage within the nation’s major law firms, and how it has varied in the past decade.
The 2006-2007 NALP Directory of Legal Employers, which provides the individual firm listings on which the 2006 aggregate analyses are based, is available online at www.nalpdirectory.com.
Table 1. Law Firm Leverage Nationwide — 1995-2006
Note: These analyses are based on the NALP Directory of Legal Employers from 1995-2006. During this time, the number of offices included in the Directory has increased, as shown in the last column. The number of lawyers represented has likewise increased, from about 77,000 to 132,000.
Table 2. Law Firm Leverage — 2006
Source: The 2006-2007 NALP Directory of Legal Employers. For law firms that repeated firm-wide information for each office listing, information was retained for just one office to avoid double counting. Some city information includes one or more offices in adjacent suburbs. Orange County includes offices in Costa Mesa, Irvine, and Newport Beach. The San Jose area includes offices in Cupertino, Menlo Park, Mountain View, Palo Alto and E. Palo Alto, Redwood Shores/Redwood City, San Jose, and Sunnyvale. The Northern New Jersey/Newark area includes offices in Newark, Livingston, Rochelle Park, Roseland, West Orange, Florham Park, Hackensack, Morristown, Parsippany, Short Hills, Westfield, Bridgewater, Somerset, and Woodbridge. Northern Virginia includes offices in Falls Church, McLean, Reston, Vienna, and Alexandria. State figures exclude cities reported separately.
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