LOS ANGELES, Calif. (December 13, 2016) – Armanino LLP, the largest independent accounting and business consulting firm based in California, today released the findings of its most recent Southern California Law Firm Compensation, Billing Rates and Benefits Survey. The survey provides unique and important insights that help law firms guide operating strategy. The highlight of the 2016 report is the $119,000 average base salary for local first year associates. While compensation levels can vary significantly across practice areas, this is a surprising statistic given recent announcements that Am Law 100 firms have increased salaries for new attorneys to a staggering $180,000.
This year’s survey found a continuation of the profit challenges that have faced traditional law firms since the Great Recession, as expectations of growth remain tempered while costs march higher. Nearly half of the almost 200 firms surveyed expect little to no revenue growth over the next two years, reflecting the softening client demand for legal services. Clients’ legal options have expanded with more work being retained in-house, and as a result, local law firms are reporting average billable hours have declined by nearly seven percent over the past four years, while billing rates remain stuck at 2012 levels.
The Armanino Survey also highlights the acute impact of this trend on the type of work being sent to outside law firms. With greater ability to do routine legal work themselves, clients are less willing to pay for junior staff hours. Average billable hours for paralegals with less than ten years of experience have dropped 16 percent in the past four years, while attorneys in their first four years of practice have seen their hours reduced by four percent. Despite the reduced billable hours and flat rates, total compensation for attorneys has gone up five percent over the past four years, while paralegals have seen increases of 15 percent.
At the other end of the spectrum, partners in local law firms are working harder than ever to maintain their compensation levels: their hours are up by 10 percent since 2012, but their total pay has not kept pace at seven percent growth.
Managing partners have responded by slashing non-attorney expenses by 20 percent over the past four years, but this year’s survey is finding that limits are starting to be reached on such cost-cutting programs, as major fixed costs of employee salaries, office rents and insurance continue to rise. The pressure to maintain profitability has now started to affect attorney hiring, as the ratio of associates to equity partners has declined by 15 percent since 2012.
“The annual Southern California Law Firms Compensation Survey provides the most precise view of how law firms in the region are managing compensation and billing rates for their employees,” said David Roberts, managing partner of Armanino’s Law Firm Services Group. “Firms who want to stay competitive in the Southern California region need to know market rate expectations for top talent. Our annual survey provides the HR and finance organization with details fine-tuned to their needs by position, experience and even practice area.”
Nearly 200 law firms in Los Angeles, Orange and San Diego counties were surveyed across nearly 100 positions, including partners, attorneys, paralegals, legal secretaries, administrators and more. The report details competitive compensation, billing rates, hours and staff ratios across many demographic segments including practice areas, locations, firm sizes and positions.
To learn how to access a copy of the survey, please reach Crystal Lee at [email protected] or visit https://lawfirmsurvey.armanino.com/.
Armanino LLP (www.armanino.com) is one of the 25 largest independent accounting and business consulting firms in the nation. Armanino provides an integrated set of audit, tax, business management, consulting and technology solutions to companies in the U.S. and globally. The firm helps clients adapt and change in every stage of business, from startup through rapid growth to the sale of a company. Armanino emphasizes smart technology, leading a cloud revolution of financial, operational, sales and compliance tools that are transforming the way companies do business. Armanino is an independent member firm of Moore North America Inc. (MNA), which is itself a regional member of Moore Global Network Limited (MGNL), one of the world's major accounting and consulting membership organizations. All the firms associated with MNA and MGNL are independent entities, owned and managed in each location. Their membership in, or association with, MNA or MGNL should not be construed as constituting or implying any partnership between them. In addition to its core consulting and accounting practices, Armanino operates its division, AMF Media Group (www.amfmediagroup.com), a media and communications services agency. Its affiliate, Intersect Capital (www.intersectcapitalllc.com) is an independent financial planning, wealth and lifestyle management firm.
