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State Bar of Michigan: 2007 Economics of Law Practice in Michigan Page 10



HE 2007 STATE BAR OF MICHIGAN ECONOMICS OF
LAW SURVEY

The State Bar of Michigan Economics of Law Practice Survey provides Michigan attorneys with
a resource that allows them access to the most current law practice economic information
available collected by the State Bar of Michigan. The survey results are provided as a free
service to members of the State Bar of Michigan.
The State Bar of Michigan Economics of Law Practice Survey has two practical objectives:
¢ To provide timely, relevant, and accurate information to inform and guide the practical
management decisions of Michigan attorneys.

e To track and illustrate changes and trends within the legal profession over time.

The survey monitors and reports on several points of information that are useful to attorneys:

e Attorney income
Prevailing average hourly billing rates for attorneys and legal assistants
Time allocated to billable and non-billable professional activities

e Overhead expenses and management practices

e Staff compensation and benefits

¢ Perceptions regarding current and future economic circumstances related to the practice
of law

Collection and reporting of this information is designed in a manner to differentiate among the
various regional and local markets where sufficient data is available. Data is only reported for
subgroups (such as field of practice, geographic location, firm size, etc.) where there are five or
more respondents.

In addition to this summary report, the full survey results are available on the survey website at

www.lawpracticeeconomics.com The website, provided by Synergy Management Solutions,
Inc., allows for custom queries on several data points, and results are provided in ready-to-use

charts, tables, and graphs.

The previous eight Economics of Law Practice Surveys were conducted by the State Bar of
Michigan in paper format in July 1981, April 1984, June 1988, March 1991, April 1994, April
1997, June 2000, and June 2003.

In April 2007, the Law Practice Management Section of the State Bar released the 2007
Economics of Law Practice Survey in an online format via the Internet at
www.LawPracticeEconomics.com, a service of Synergy Management Solutions, Inc.

For the 2007 Economics of Law Practice Survey, all members of the State Bar were invited to
participate in the online survey or by paper survey if no e-mail address was available for the
member. In the past, a sample size of only 25 percent of active members was selected to
participate using a paper-based questionnaire. In 2003 1,200 individuals provided usable
responses to the survey, and in 2007, 1,297 provided usable responses. All survey information is

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A T A GLANCE

The tables in the 2007 Economics of Law Practice Report are intended to be self explanatory.
Some observations include:

© The average age of survey respondents was consistent with the average age of all active
members of the State Bar of Michigan. The average age for survey respondents was 46.7
years, while the average of all active members is 49.3 years.

¢ The gender split of survey respondents was consistent with the gender split of all active
members of the State Bar of Michigan. 71.5 percent of survey respondents were male
compared to 69.3 percent of all active members.

e The largest group of survey participants was solo practitioners (20.0 percent). Solo
practitioners with one or more associates comprised and additional 3.8 percent while solo
practitioners sharing space comprised an additional 3.8 percent.

¢ The median gross personal income for a Michigan attorney reported in the survey was
$92,000.

© Median gross personal income for females was lower than for males regardless of years
in practice.

¢ The median salary for females in private practice was 67% of the median salary for males
in private practice.

e In general, gross personal income increased with firm size for private practitioners.

© Of the individuals reporting the amount of time spent on unbilled community service per
week, the median was two hours.

© 24.5 percent reported the practice of law was becoming less satisfying 8.3 percent
reported it was unsatisfying enough to quit practicing and 5.3 percent reported it was
becoming unsatisfying enough to change their practice area. 18.4 percent reported that it
was becoming more satisfying and 43.4 percent reported that their satisfaction remains
the same.

© 52.4 percent reported their view that there are too many attorneys.

¢ 61.7 percent reported that current economic conditions are worse than previous years.

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collected and maintained in a confidential manner and reported in aggregate. No individual
member or firm is identified.

The 2007 survey requested income data for the last complete calendar year. The 2007 report
reflects the income earned by attorneys and firms in the previous calendar year. This procedure
is consistent with all prior Economics of Law Practice Surveys.

To help interpret the information presented in the survey results, the following is a brief
discussion of statistical terms, including measures of central tendency (median and mean) and
measures of dispersion (spread).
Mean — The mean (also called the average or arithmetic average) is calculated by adding the
values of all responses, then dividing by the number of responses.
For example, three responses (30, 1, and 2) are reported. The average is calculated by adding
their values (30 + 1 + 2 = 33) and then dividing by the number of responses (3). Thus, the
average is (33 +3 = 11).
Median — The median is the middle value of a series, or distribution of values, which is initially
rank-ordered (from low to high or vice versa). By definition, half the numbers are greater and
half are less than the median.
For example, three responses (30, 1, and 2) are reported. The median is the middle number of the
order of distribution (1, 2, 30), or 2. By comparison, the average of this same distribution, as
shown above, is (33 + 3 = 11).
Use of the median as a statistical metric of central tendency reduces the effect of ‘outliers’
(extremely high or low values, such as the data point of 30 in the previous example), while the
average does not. Median values are utilized throughout the results to denote the measure of
central tendency.
Percentiles — In addition to the median, four other percentile values are used in the survey
results to reveal the spread or dispersion of a particular data distribution. The percentiles include:
= 10th Percentile — Ten percent of the values are less and ninety percent are more than this
value.
= 25th Percentile — Also referred to as the ‘lower quartile.’ One-fourth of the values are
less and three-fourths are more than this value.
= Median or 50th Percentile — Also referred to as the 'median.' Half of the values are less
and half are more than this value.
= 75th Percentile — Also referred to as the upper quartile.’ Three-fourths of the values are
Jess and one-fourth are more than this value.
= 90th Percentile — Ninety percent of the values are less and ten percent are more than this
value.

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ro AND WORKLOAD

Gross Personal Income before Taxes for All Respondents

‘90th Percentile $236,041

‘75th Percentile $143,000
Mean

Median

25th Percentile

10th Percentile

$0 $50,000 $100,000 $150,000 $200,000 $250,000

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State Bar of Michigan: 2007 Economics of Law Practice in Michigan Page 5



EXHIBIT 2

PART 1



Median Gross Income before Taxes by Major Field of Practice

‘Criminal Law $45,000
Immigration & Naturalization $55,000
General Practice $55,500

Social Security

Probate & Estate
Insurance Coverage
Family Law

Wills

Automobile

Insurance

Real Estate

Labor Law

Construction Law
Workers' Comp. (Plaintiff)
Legal Malpractice
‘Municipal Law

Medical Malpractice
Collections/Claim & Delivery
Personal Injury
Intellectual Property
Business Law

Bankruptcy

Appellate Practice
Alternative Dispute Resolution (ADR)
Commercial Law

Real Property

Other/Not Listed

Elder Law

Litigation

Taxation

Workers' Comp. (Defense)
Employment Law
Contracts

Patents

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State Bar of Michigan: 2007 Economics of Law Practice in Michigan Page 8

$59,000
$62,500
$70,000
$70,000
$75,000
‘$76,000
$84,000
$85,000
$87,500
$87,500
$90,855
$93,500
$97,278
$100,000
$100,000
$100,800
$102,000
$103,000
$104,000
$107,500
$107,581
$110,000
$111,968
$112,500
$115,000
$119,902
$127,500
$129,197
$130,000
$135,000
$157,000

25,000 $50,000

‘$75,000 $100,000 $125,000 $150.00 $175,000





e The median reported transactional and litigation hourly rates were the same at $195.

Private practitioners have relatively similar median hourly transactional and litigation
rates regardless of work classification.

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Hourly Transactional Rate by Work Classification
Hourly Litigation Rate by Work Classification.
Top 10 Median Hourly Transactional Rates by Office Region
Top 10 Median Hourly Litigation Rates by Office Region
Reported Staff Salaries

Appendix: Profile of Survey Respondents

Average Age of All Active Members and Survey Respondents
Percentage of All Active Members and Survey Respondents by Gender.
Demographics of Survey Respondents.
Work Classification of Survey Respondents.
Major Field of Practice of Survey Respondents.
Main Location of Practice of Survey Respondents
Survey Respondents by Firm Size.



Table of Contents

Overview

The 2007 State Bar of Michigan Economics of Law Practice Survey.
At a Glance.

Income and Workload

Gross Personal Income before Taxes for All Respondents ..
Gross Personal Income before Taxes by Work Classification
Gross Personal Income before Taxes by Major Field Of Practice.
Median Gross Income before Taxes by Major Field Of Practice .
Gross Personal Income before Taxes by Years in Practice and Gender, All Attorneys.
Median Gross Income before Taxes by Years in Practice and Gender for All Attorneys

and Private Practitioners Displaying the % of Female to Male Incomes.
Median Gross Income for Private Practitioners by Firm Size. .
Median Gross Income for Private Practitioners and Non-Private Practitioners by Firm Size..
Gross Income before Taxes by Practice Regions. .
Median Hours Spent Per Week on Work Related Activities by Work Classification.
Median Annual Non Billable Hours by Work Classification

Attorney Perceptions

Expectation of Satisfaction with the Practice of Law.
Relative Amount of Personal Workload......
Personal Satisfaction from the Practice of Law.
Perceptions Concerning the Number of Attorneys
Perceptions of Current Economic Conditions Compared to Prior Years.
Perceptions of Future Economic Conditions............:::cccscseeceeeeee

Private Practitioners and Managing Partners — Firm Data

If Your Firm Employs Paralegals or Legal Assistants, How are Their Services Billed? .......
By How Much Did Your Firm Change the Hourly Billing Rate Last Time it was Reviewed?
How Often Does Your Firm Review Hourly Billing Rates?
What Percentage of Your Billings are Uncollectable?
Top Median Hourly Transactional Rates by Firm Size
Distribution of Hourly Transactional Rates by Firm Size
Top Median Hourly Litigation Rates by Firm Size .
Distribution of Hourly Litigation Rates by Firm Size .
Median Hourly Transactional Rates by Years in Practice
Distribution of Hourly Transactional Rates by Years in Practic
Median Hourly Litigation Rates by Years in Practice...
Distribution of Hourly Litigation Rates by Years in Practice.
Top 10 Median Hourly Transactional Rates by Field of Practice.
Top 10 Median Hourly Litigation Rates by Field of Practice ...



State Bar oF MICHIGAN

2007 Economics of Law Practice
Summary Report



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State Bar of Michiga!

2007 Economics of Law Practice in Michigan Page 9