By John F. Sase
with
Gerard J. Senick, contributing writer & editor
(Mostly What We Need to Know About Revenue and Costs)
Living in the multi-layer economies of an average law firm, how much revenue do small law firms earn? Given this inquiry of what constitutes law firm revenues, how much do larger law firms clear on average? If these income amounts do not satisfy the practitioner, how may practitioners increase the revenue of his/her/their firm?
This method is key to the sustaining success of any business and rings true, especially for enterprises such as law firms. Furthermore, as with many industries, revenue serves as the key metric for law firm owners to both track and grow. Throughout numerous types of manufacturing and service industries, owner-operators seek to improve their profitability.
Positive revenue provides a favorable beacon throughout most small to large businesses. Nevertheless, how do groups of attorneys know whether or not their law firm’s revenue suffices to scale and grow their business correctly? Furthermore, how does one’s firm’s revenue stack up against the revenues of the average firm overall?
Our query will cover what one firm needs to know about average law firm revenue. We shall include a look at the average amount of gross compensation that attorneys bring into their firm--the key factor affecting the revenue of a firm as well as the ways one can increase revenue at their firm.
The following view considers how we measure a firm’s success (not only Law Practices) by tracking the increase in its revenue, which allows us to set the revenue goals of a firm more accurately.
Is There a Law-Firm Revenue that Stands at the Mean (Middle-Most) Value?
The concept of an average law firm revenue exists by nature. The revenue produced by a single firm depends upon its unique situation. To simplify matters and improve insight, we may consider the average revenue flowing to a solo law firm. Furthermore, we consider how solo practices compensate an attorney.
For simplicity and clarity, let us consider the inflationary impact suggested by the Martindale-Avvo Anticipated Legal Consumer Research as we determine how much revenue a small law firm makes. Presently, we can rely upon the Martindale-Avvo 2023 iteration of its annual Understanding the Legal Consumer Research Report. Therefore, statistics of a solo law firm may offer professional information concerning your industry as you face the running of your firm.
Simple Beginnings
As a child, I grew up in a real-estate household. My father built his offices on the north side of McNichols Avenue, just across the street from the Marygrove College campus in Northwest Detroit. When I asked him why he named his business Marygrove Realty, he told me that potential clients who knew the location of the College could easily find his offices. Curiously, the home of Fritz Julius Kuhn, elected leader of the German American Bund, resided on a block south of Marygrove College in a square mile of great diversity.
In part due to walking/short-drive distance from our home and the high reputation that the College had for the development of early education, my parents enrolled me there for Kindergarten. For elementary school, my parents enrolled me at Precious Blood Parochial School, which was within walking distance from our home. Similarly, I chose to attend U of D Jesuit High School along Seven Mile Road in Detroit.
For reasons of air quality and the recommendations of some of my older cousins, I decided to get out of the city for awhile by enrolling at Michigan State. There, I discovered “Justin Morrill College,” which combines the traditional with the innovative, challenges each student to discover himself and who he wants to be and to learn something about the interdependence of the modern world.”
During my extended years of education, I mainly relied on savings, gifts, flipping burgers at Red Barn, and the income I could earn as a rock, blues, country, and folk guitarist and bassist. This path also presented itself as an excellent business learning tool.
During my sophomore year, I worked as a bass guitarist in a band named PillowCayse (“y”? We don’t know y”). Our lead singer and driving force, John (Jackie) Martling, became Jackie the Jokeman on the Howard Stern Show. Our lighting person for larger gigs in our dorm and elsewhere was Northwest Detroiter Bill Mechanic. Following his undergraduate studies, he gained significant recognition by developing the packaged video industry for Disney Studios. In later years, Bill headed 20th Century Fox during his tenure, where he was responsible for the now-classic production of “Titanic.”
During our junior and senior undergrad years, we co-founded a quintet named Uranus. Following graduation, our lead guitarist, Mike Rosatti, went to Law School and entered the family practice in Farmington, MI. Our lead singer/saxophonist, Terry Hunt, became the Public Defender in New Orleans. In contrast, our drummer Martin Adams remained around East Lansing with Walter Adams and others of that academically notable MSU family.
Having graduated from Justin Morrill Residential College located in Lansing-Reilly Hall on the MSU campus, I reacclimated myself to Detroit via Monteith College at Wayne State (similar to Justin Morrill College), and earned a Master of Business Administration and an MA in Economics within the Graduate Business School at the University of Detroit. I volunteered and served in the Jesuit Volunteer Corps during the one-year hiatus between these two degrees. I focused on developing a nationally computerized food bank accounting system supported by Gene Gonya and the other founding members of Gleaners Community Foodbank in Detroit.
After earning my two master’s degrees, I received a Doctoral scholarship to the University of Notre Dame in Indiana. Their main campus sits about ten miles from the Detroit/Chicago rail line, so I was able to return home on most weekends. However, given that both parents were entering the phase of terminal illness and I was an only child, I answered their call and returned home in the winter of my first year. My family beliefs exceeded practical monetary beliefs.
Post-mortem to my parents, but after meeting Julie Gale (my wife of thirty-plus years), the Wayne State University Department of Economics offered me a very solid scholarship and family support to finish my Doctorate in Economics. (Note: My wife delivered our two daughters before I walked for my diploma. It all proved worthwhile.)
2020 Martindale-Arvo Attorney Compensation Report
In writing the article for this month, I pulled out a copy of the 2020 Martindale-Arvo Attorney Compensation Report and found some recently updated information. Having worked for many attorneys at small firms or solo practices over the years, I find this gambit of reports enlightening and useful in reaching out to my own clients.
In short, the everyday life that we experience helps us to assess many events and situations, including those of the average law firm’s success and revenue. In this respect, we must consider the impact of factors like practice area, location, client type, etc. Therefore, the M-A Report offers insight into compensation and related aspects of law practice. I find such articles illuminating for down-to-earth discussions regarding hours worked, time with clients, community involvement, average pay, billing structure, job challenges, and rewards.
A Bit of an Overview
When we assess average law firm revenue, we need to consider the impact of factors such as practice area, location, and client type.
Given the 2020 Martindale-Avvo Attorney Compensation Report (we are still waiting on the newer ones), we find that the average compensation of 2019 provided solo law firms with the ability to bill legal services for approximately $150,000 to $160,000 per year. Though this compensation decreased slightly from the preceding year, the average compensation for a solo practitioner reached an annual amount of approximately $160,000.
Performance will emerge during post-COVID years based on current studies of the Legal Business as an economic segment. Average potential revenue for an independent attorney typically varies, though it generally appears to match the revenue of attorneys who work in-house at relatively small law firms. Note: In recent years, these earnings have exceeded $225,000 per annum.
As we assess the average law firm revenue, we need to consider the impact of factors that include practice area, location, and client type. As most of my client base tends to have smaller or solo practices, I find such exploration worthwhile not only to myself but, hopefully, to our readers.
————————
Dr. John F. Sase teaches Economics at Wayne State University and has practiced Forensic and Investigative Economics for twenty years. He earned a combined M.A. in Economics and an MBA at the University of Detroit, followed by a Ph.D. in Economics from Wayne State University. He is a graduate of the University of Detroit Jesuit High School (www.saseassociates.com).
Gerard J. Senick is a freelance writer, editor, and musician. He earned his degree in English at the University of Detroit and was a supervisory editor at Gale Research Company (now Cengage) for over twenty years. Currently, he edits books for publication (www.senick-editing.com).
with
Gerard J. Senick, contributing writer & editor
(Mostly What We Need to Know About Revenue and Costs)
Living in the multi-layer economies of an average law firm, how much revenue do small law firms earn? Given this inquiry of what constitutes law firm revenues, how much do larger law firms clear on average? If these income amounts do not satisfy the practitioner, how may practitioners increase the revenue of his/her/their firm?
This method is key to the sustaining success of any business and rings true, especially for enterprises such as law firms. Furthermore, as with many industries, revenue serves as the key metric for law firm owners to both track and grow. Throughout numerous types of manufacturing and service industries, owner-operators seek to improve their profitability.
Positive revenue provides a favorable beacon throughout most small to large businesses. Nevertheless, how do groups of attorneys know whether or not their law firm’s revenue suffices to scale and grow their business correctly? Furthermore, how does one’s firm’s revenue stack up against the revenues of the average firm overall?
Our query will cover what one firm needs to know about average law firm revenue. We shall include a look at the average amount of gross compensation that attorneys bring into their firm--the key factor affecting the revenue of a firm as well as the ways one can increase revenue at their firm.
The following view considers how we measure a firm’s success (not only Law Practices) by tracking the increase in its revenue, which allows us to set the revenue goals of a firm more accurately.
Is There a Law-Firm Revenue that Stands at the Mean (Middle-Most) Value?
The concept of an average law firm revenue exists by nature. The revenue produced by a single firm depends upon its unique situation. To simplify matters and improve insight, we may consider the average revenue flowing to a solo law firm. Furthermore, we consider how solo practices compensate an attorney.
For simplicity and clarity, let us consider the inflationary impact suggested by the Martindale-Avvo Anticipated Legal Consumer Research as we determine how much revenue a small law firm makes. Presently, we can rely upon the Martindale-Avvo 2023 iteration of its annual Understanding the Legal Consumer Research Report. Therefore, statistics of a solo law firm may offer professional information concerning your industry as you face the running of your firm.
Simple Beginnings
As a child, I grew up in a real-estate household. My father built his offices on the north side of McNichols Avenue, just across the street from the Marygrove College campus in Northwest Detroit. When I asked him why he named his business Marygrove Realty, he told me that potential clients who knew the location of the College could easily find his offices. Curiously, the home of Fritz Julius Kuhn, elected leader of the German American Bund, resided on a block south of Marygrove College in a square mile of great diversity.
In part due to walking/short-drive distance from our home and the high reputation that the College had for the development of early education, my parents enrolled me there for Kindergarten. For elementary school, my parents enrolled me at Precious Blood Parochial School, which was within walking distance from our home. Similarly, I chose to attend U of D Jesuit High School along Seven Mile Road in Detroit.
For reasons of air quality and the recommendations of some of my older cousins, I decided to get out of the city for awhile by enrolling at Michigan State. There, I discovered “Justin Morrill College,” which combines the traditional with the innovative, challenges each student to discover himself and who he wants to be and to learn something about the interdependence of the modern world.”
During my extended years of education, I mainly relied on savings, gifts, flipping burgers at Red Barn, and the income I could earn as a rock, blues, country, and folk guitarist and bassist. This path also presented itself as an excellent business learning tool.
During my sophomore year, I worked as a bass guitarist in a band named PillowCayse (“y”? We don’t know y”). Our lead singer and driving force, John (Jackie) Martling, became Jackie the Jokeman on the Howard Stern Show. Our lighting person for larger gigs in our dorm and elsewhere was Northwest Detroiter Bill Mechanic. Following his undergraduate studies, he gained significant recognition by developing the packaged video industry for Disney Studios. In later years, Bill headed 20th Century Fox during his tenure, where he was responsible for the now-classic production of “Titanic.”
During our junior and senior undergrad years, we co-founded a quintet named Uranus. Following graduation, our lead guitarist, Mike Rosatti, went to Law School and entered the family practice in Farmington, MI. Our lead singer/saxophonist, Terry Hunt, became the Public Defender in New Orleans. In contrast, our drummer Martin Adams remained around East Lansing with Walter Adams and others of that academically notable MSU family.
Having graduated from Justin Morrill Residential College located in Lansing-Reilly Hall on the MSU campus, I reacclimated myself to Detroit via Monteith College at Wayne State (similar to Justin Morrill College), and earned a Master of Business Administration and an MA in Economics within the Graduate Business School at the University of Detroit. I volunteered and served in the Jesuit Volunteer Corps during the one-year hiatus between these two degrees. I focused on developing a nationally computerized food bank accounting system supported by Gene Gonya and the other founding members of Gleaners Community Foodbank in Detroit.
After earning my two master’s degrees, I received a Doctoral scholarship to the University of Notre Dame in Indiana. Their main campus sits about ten miles from the Detroit/Chicago rail line, so I was able to return home on most weekends. However, given that both parents were entering the phase of terminal illness and I was an only child, I answered their call and returned home in the winter of my first year. My family beliefs exceeded practical monetary beliefs.
Post-mortem to my parents, but after meeting Julie Gale (my wife of thirty-plus years), the Wayne State University Department of Economics offered me a very solid scholarship and family support to finish my Doctorate in Economics. (Note: My wife delivered our two daughters before I walked for my diploma. It all proved worthwhile.)
2020 Martindale-Arvo Attorney Compensation Report
In writing the article for this month, I pulled out a copy of the 2020 Martindale-Arvo Attorney Compensation Report and found some recently updated information. Having worked for many attorneys at small firms or solo practices over the years, I find this gambit of reports enlightening and useful in reaching out to my own clients.
In short, the everyday life that we experience helps us to assess many events and situations, including those of the average law firm’s success and revenue. In this respect, we must consider the impact of factors like practice area, location, client type, etc. Therefore, the M-A Report offers insight into compensation and related aspects of law practice. I find such articles illuminating for down-to-earth discussions regarding hours worked, time with clients, community involvement, average pay, billing structure, job challenges, and rewards.
A Bit of an Overview
When we assess average law firm revenue, we need to consider the impact of factors such as practice area, location, and client type.
Given the 2020 Martindale-Avvo Attorney Compensation Report (we are still waiting on the newer ones), we find that the average compensation of 2019 provided solo law firms with the ability to bill legal services for approximately $150,000 to $160,000 per year. Though this compensation decreased slightly from the preceding year, the average compensation for a solo practitioner reached an annual amount of approximately $160,000.
Performance will emerge during post-COVID years based on current studies of the Legal Business as an economic segment. Average potential revenue for an independent attorney typically varies, though it generally appears to match the revenue of attorneys who work in-house at relatively small law firms. Note: In recent years, these earnings have exceeded $225,000 per annum.
As we assess the average law firm revenue, we need to consider the impact of factors that include practice area, location, and client type. As most of my client base tends to have smaller or solo practices, I find such exploration worthwhile not only to myself but, hopefully, to our readers.
————————
Dr. John F. Sase teaches Economics at Wayne State University and has practiced Forensic and Investigative Economics for twenty years. He earned a combined M.A. in Economics and an MBA at the University of Detroit, followed by a Ph.D. in Economics from Wayne State University. He is a graduate of the University of Detroit Jesuit High School (www.saseassociates.com).
Gerard J. Senick is a freelance writer, editor, and musician. He earned his degree in English at the University of Detroit and was a supervisory editor at Gale Research Company (now Cengage) for over twenty years. Currently, he edits books for publication (www.senick-editing.com).
