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More Law Firms Will Cut Partners in 2013: Survey

By Deanne Katz, Esq. on November 25, 2012 | Last updated on March 21, 2019

Many law firms are still feeling the pinch of declining billable hours, and for some the solution may be to cut partners.

Underutilized partners are one of the biggest issues the legal industry is dealing with as the country struggles to climb out of the recession. That's according to a new survey by Wells Fargo Private Bank which examined the finances of 115 firms.

The number of billed hours is down overall, but this time around it's not associates who are getting the ax. From the report, it looks like it's partners who aren't pulling their weight.

Overall, the total number of hours billed in the third quarter was down 1.5 percent compared to last year's numbers. But hours billed by associates were only down 0.5 percent, reports Reuters.

That means the missing hours are coming mostly from equity and non-equity partners.

Revenues also grew slightly during the same time period, and net income went up a little as well. But keeping lawyers who don't have enough billing hours is still a bad economic decision.

Of the firms surveyed, 15 percent say they're planning to cut partners in the coming year. That's not a record, but it's certainly an increase from the typical 5 percent seen in the survey, according to the ABA Journal.

The decision to downsize partners in a firm may foreshadow permanent structural changes in firm administration.

If there isn't enough work for the current number of partners, then it doesn't seem likely new partnerships will be given out to rising associates. That's a blow for new attorneys who expected that making partner would be part of the deal.

Still, the news isn't bad for all firms across the board. For about a dozen top-tier firms, billable hours and profits are up. Now if only they would share their secrets.

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