Law firm prodictivity down

Image via WikipediaThe West Peer Monitor Index, a measure of legal market conditions, found large law firms had the lowest productivity in the third quarter.

Overall, law firm productivity was down by 4.5 percent overall and 6.5 percent at the 100 largest firms. The report attributes the low productivity level to large firms having too many associates with too little to do.

“In spite of the various reports of layoffs and firm contractions, the factor that looms largest is the swelling of unproductive associates in firms,” the report reads. “This is especially true with the large firm segment, which is experiencing the lowest productivity in the industry.”

Layoffs have become increasingly common at major firms, but staff reductions have lagged behind the falloff in demand for legal services, further pushing down productivity. Still, the legal industry is definitely in downsizing mode.

Associate hiring declined by 6 percent from a year before, and law firms are offering equity partnerships to half as many attorneys as they did the previous year, according to the index. Lateral growth was about the same as in 2007.

On demand for services, billable hours dropped 2.5 percent in the third quarter following a 2 percent decline in the second quarter, according to the index. The drop in billable hours during the third quarter was especially steep in July and August at 5 percent, but demand rebounded in September to bring up the quarterly average.

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