The PA Law 100

2012

Top 100 Law Firms in Pennsylvania

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Managing Partners Survey ber of firms that saw decreases in partner profits rose from 3.4 percent in 2011 to 20.7 percent in 2012. When asked what firms did in the last year to retain profitability levels, the biggest tactics were increasing rates, switching their focus to higher-demand practice areas and re- ducing the number of equity partners. Not as many firms raised rates in 2012, however, as they did in 2011. This year, 65.4 percent of respondents raised rates, whereas 73.9 percent had done so in 2011. The percentage of firms that resorted to reducing their equity partner ranks rose from 8.7 percent in 2011 to 26.9 percent in 2012. Consultants have said for the past few years that the only real way firms would be able to continue to cut costs and improve profitability would be to get rid of partners who weren't pulling their weight. It appears this may be starting to happen. The number of firms that said they de- equitized partners in the last year rose only slightly from 23.3 percent to 26.7 percent, however. But the number that plan on de- equitizing partners in the next year rose from 13.8 percent to 23.3 percent. While most respondents said de-equitizations would af- fect between 1 and 3 percent of their part- nerships, one firm on the anonymous survey said between 15 and 30 percent of its part- nership might be affected. How firms pay their attorneys has shifted since the recession, with associates most af- fected as firms moved away from lockstep compensation to competency-based models. Firms are beginning to look more closely at IS YOUR FIRM ABLE TO CHARGE CLIENTS FOR FIRST- AND SECOND-YEAR ASSOCIATES? how partners are paid as well. In 2011, 3.2 percent of respondents said they were planning on changing compensa- tion models for partners, while 12.5 percent said the same in 2012. Another 12.5 percent of this year's respondents said they would change compensation models for both part- ners and associates. While 90.3 percent of re- spondents in 2011 said they weren't changing anything, only 68.8 percent said so this year. While 34.6 percent of 2011 respondents increased starting salary for first-year associ- ates, only 21.4 percent did so this year. The majority of last year's respondents felt first- years were fairly compensated, but in 2012, 51.6 percent said first-years were overpaid. And one respondent decreased first-year as- sociate salaries at the firm. For the first time, we asked firms wheth- er they were able to charge clients for work done by first- or second-year associates. More than 62 percent said they were always able to charge for that work and nearly 38 percent said they sometimes were able to charge for work by junior associates. No one said they were never able to charge for first- and second-year associates. MARKETING The number of firms with marketing directors and marketing partners both declined. While 67.7 percent of firms had a CMO or similar position last year, 62.5 percent had such a position this year. The percentage of firms that have a marketing partner continues to decline, dropping from 58 percent last year to 50 percent this year. That figure was at WITH RESPECT TO FIRST-YEAR ASSOCIATE SALARIES THIS YEAR, YOUR FIRM: 70.4 percent in 2010. More firms, however, are devoting re- sources to marketing. Nearly 91 percent of respondents had marketing budgets in 2012, compared to nearly 81 percent who did in 2011. In both years, those budgets ranged between 1 percent and 10 percent of a firm's expenses. Managing partners were asked to rank mar- keting tools on their effectiveness, with 1 be- ing the most effective and 12 being the least effective. Firm websites received the highest number of votes for being the most effective, but that only came in at 15.6 percent. Entertaining and social events were ranked first by 12.5 percent of managing partners and 10.7 percent of firm leaders said client surveys were the most effective marketing tool. The least effective tool, firm leaders said, was cold calling. THE CLIENTS It seems that law firms are following the ad- vice of consultants who have long suggested firms use client surveys and long lamented the small number that actually do. The number of Pennsylvania firms that employ client survey tools has steadily risen in the past few years. In 2010, 18.5 percent of firms said they used client satisfaction sur- veys. In 2011, that number rose to 35.5 per- cent and in 2012 it was at 43.8 percent. The bulk of firms — 66.7 percent — survey their clients annually. Fewer firms were able to report that cli- ents were regularly paying their bills without (continued on page 86) REGARDING FIRST-YEAR ASSOCIATES, WHAT DID YOUR FIRM HIRE FOR THE FALL OF 2012? 62.1% Always 37.9% Sometimes 0% Never 21.4% Increased salaries 75% Kept them the same 3.6% Decreased salaries 25.8% More first-year associates 32.3% Same amount 16.1% Fewer first-year associates 25.8% No first-year associates PaLaw 2012 | 85

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