Statistics show income changes for Michigan legal community

by Cynthia Price
Legal News

The general perception about attorney incomes in the state of Michigan seems to be that they are going down. But it is certainly clear from the 2010 State Bar of Michigan (SBM) Economics of Law Practice survey results released so far that there are big variations across categories in how much, or even whether, that is the case.

The Economics of Law Practice survey is conducted every three or four years to “provide timely, relevant, and accurate information to inform and guide the practical management decisions of Michigan attorneys [and] track and illustrate changes and trends within the legal profession.”

The survey asks questions about such matters as attorney income, field of practice, geographic and jurisdictional information, time allocated to billable and non-billable hours as well as to pro bono work, expenses, and perceptions about present and future economics of practicing law.

Though the responses to the 2010 survey represented a good response rate by most standards (3775 usable surveys of 29475 sent out, or a little less than 13%), and though the number of returns would be considered sufficient to reach conclusions even when subcategorized, SBM has not yet issued its final report for 2010.

The reason is simple. According to Michelle Erskine, SBM Research Assistant, the organization has decided to delve more deeply into the raw statistics, which is taking a lot longer.

Past surveys offered a great deal of information, and some of that information is already available in the “Attorney Income and Billable Hours Report” issued in January 2011. SBM has also compiled a wealth of demographic statistics in its “Statewide Demographics” document. Both are available by visiting http://www.michbar.org/opinions/content.cfm#econsurvey.

The leadership of SBM has determined a need for complex analysis of the information gathered, since major decisions about the direction of the organization will be based on it.

As the economic recovery in Michigan continues to be weak, there may be a need for adjusted expectations on the part of the increasing numbers of law school graduates — or there may not. The statistics will tell the story.

As SBM Vice-President (very soon to be President-Elect) and Rhoades McKee attorney Bruce Courtade put it in a recent interview, some traditionally strong areas of the law seem to be suffering “because people can’t hire lawyers, they can’t afford it any more.” However, statistical confirmation of that trend is not available yet.

The overall incomes of many types of attorneys have increased since 2007, according to the 2010 survey results compiled so far. In some instances the mean income (roughly equivalent to the average) increased while the median (the middle value in an order-ranked series) has decreased, or vice versa.
Though it is difficult to make assumptions about the “sole practitioner” because there were more categorical breakdowns in the 2010 survey than in 2007, it appears that the overall income has gone up. In the category of “sole practitioner sharing space,” both the mean and the median incomes went down.
For “equity partners/shareholders, the mean increased while the median decreased, while the opposite is true of the “non-equity partner.”

In the non-private sector, academics saw the largest jump of any category. “Legal services agency attorney” income went down.

The steadiest increases, though slight, occurred in attorneys not in private practice, including judges, administrative law judges and referees, and county prosecutors. This was during a period when the annual rate of inflation was 2.28%; in other words, the 2007 dollar bought the same amount as $1.07 did in 2010.

The only 2010 measures yet made public comparing geographic areas within the state are for hourly billing rates. Median Grand Rapids area billing rates, at $225 per hour, were exceeded only by Ann Arbor (highest in the state), Downtown Detroit, Oakland County  south of M59, and Southfield. The mean, at $246, showed a similar pattern, though Oakland County north of M59 also had a higher rate than Grand Rapids area and Downtown Detroit took top honors at $290.

Equally interesting is the 2010 demographic information generated from all members of the bar.

For example, while females still only represent 31.6% of State Bar members, the percentage continues to increase as the age group lowers: 25.7% of attorneys in the “Boomers” group (designated in the report as born in 1944-1960) are women (and not even 10% of the pre-1944 “Traditionalists”), the percentage is very close to 50% (49.8%) in the “Millennials” born after 1981.

People of “African Origin” represent 5.8% of the total Michigan-resident bar membership, but although that number peaks at 6.3% in the “Boomers” range, it has gone down — slightly to 6.0% in “Gen X” (1961-1980), and more definitively to 4.2% in “Millennials.” In contrast, many other racial/ethnic group percentages have increased in the “Millennials” group, so the percentage of “European” attorneys is 66.5% in that age group versus 84.8% in the overall membership.

Applied Statistics Laboratory of Ann Arbor, led by Dr. Lawrence Stiffman, and independent consultant statistician, Dr. James McComb,
tabulated and analyzed the results in the “Attorney Income and Billing Rate Summary Report,” under the direction of SBM Director of Research and Development Anne Vrooman.

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