248-409-1900 dburke@mi-worklaw.com

By:  Bill Pilchak – 1/13/15

One of the most common misconceptions in the business world is that an individual’s salary or wage is confidential. Even in-house counsel at staffing companies have resisted contractual provisions that permit customers to audit salaries/wages paid to contract staff (e.g., to determine why a high percentage have departed – perhaps because they do not get a fair share of what the customer pays), claiming that it would violate the employees’ right to privacy. After 30 years involved in employment law, I am unaware of any such right of privacy, and not a single person who has asserted the notion has ever been able to back up the point.

In fact, the law is exactly the opposite. For example, cases hold that bank and tax records which reveal income are not “private” because the information is shared with third parties: the bank and the IRS. (Duh!) Each of us tends not to reveal our income because it generates envy among those who earn less ( as Karl Marx knew well) and makes those who earn more feel superior. But, there is no “right” that one’s income cannot be disclosed. Companies do not reveal income data for many reasons, including loss of talent to competitors.

So, learning another’s income is always a bit titillating, even voyeuristic. A salty lady-lawyer and former colleague used to refer to seeing another’s economics as peeking under the other’s skirt. Well, as it turns out, the State Bar of Michigan periodically publishes a survey known at the Economics of Law Practice Survey, and did so in late 2014. Although every attorney in the state receives a copy of the results, most non-attorneys have never seen the data (possibly because many attorneys studied Marxist theory in Poli Sci classes). However, Pilchak & Cohen is pleased to provide a glimpse, because it illustrates one of the fundamentals of our business philosophy: Delivering world class legal representation to employers under a business model that lowers our internal costs so that we can provide representation at the lowest practical rates.

Before I cite statistics, it’s worth reviewing some terms: “Mean” means the “average.” “Median” is the numerical value at the midpoint of all the figures submitted; ½ of the survey answers were higher, ½ lower.

With that in mind, let’s first review relevant billing rates, keeping in mind that P&C attorneys have been consistently nominated by their opponents and peers for “Best Lawyer in America,” “SuperLawyer” and “dbusiness Top-Lawyer” status for years. The below data reflects only the categories that relate to our attorneys, with some comparison data in italics. Each client knows its billing rate for P&C’s partner/shareholders and associates, and will see that our efforts to run our business efficiently have translated directly to their bottom lines:

Hourly Rate By Employment Status, Field of Practice & Firm Size

Status 25th % Mean

Avg.

Median

Mdpt

75th%
Managing Partner 205 282 250 325
Equity Partner 250 333 310 417
Associate 175 218 208 250
Employment Law- Management 225 285 275 340
Firms w/ 3 attorneys 200 259 250 300
Firms w/ 4-6 attorneys 192 259 235 300

Hourly Rate By Years in Practice (Includes Solo Practitioners, Non-Business-Side Lawyers)

Status 25th % Mean

Avg.

Median

Mdpt

75th %
31-35 years 200 276 250 300
26-30 years 200 279 250 347
1-2 years 150 189 189 225

Hourly Rate By Location

Status 25th % Mean

Avg.

Median

Mdpt

75th%
Downtown Detroit 195 304 275 400
Oakland County South of M-59 200 280 250 325
Oakland County North of M-59 200 266 250 300
Southfield 210 280 250 325
Oakland County Combined 200 278 250 325

Comparing your billing rate to the data, you will see that P&C clients are billed at or below the mid-point means and medians in all categories.

Okay, so much for the “business” stats. I promised you a naughty peek at attorney income, and will deliver. First, let’s take a look at statistics relevant to many of the solo practitioners that sue our clients. Keeping my earlier blogs about a certain law school churning out too many lawyers in mind, you will see that some private practitioners generate so little income that they have a motive to take bad cases.

Income for Sole Practitioners (“Solos”)

Status Number

Of Responses

25th % Mean

Avg.

Median

Mdpt

75th %
Solo with office outside of home 444 40,000 120,929 75,000 145,000
Solo with home office 222(!) 9,563 47,881 25,083 64,000
Solo sharing office space 138 40,000 92,728 70,000 103,000

Not all lawyers respond to the survey. However, one can easily see how many private practitioners do not even make $100,000 per year, how many hover around $50,000 and how 25% make $40,000 or below! Once, attorneys would not invest their valuable time in bad cases. Now, attorney-time is not so

Income for Attorneys Like Us

Status 25th % Mean

Avg.

Median

Mdpt

75th %
Managing Partner 104,000 329,036 200,000 350,000
Equity Partner 132,287 300,921 215,000 350,000
Senior Associate 85,000 123,595 105,000 143,000
Associate 50,000 79,412 70,000 97,000
Total All Private Practitioners 52,196 178,340 100,000 200,000

We are not going to reveal our actual incomes, but will say this: Despite bill rates mostly below the mid-point means and medians in all categories, we are happy to generally be at, near or above the midpoints in earnings over recent years. Most of our clients know that personal financial gain, while important, is not our primary motivator. Our personal insistence upon excellence, our reputations among judges and the legal community, respect for our knowledge and strategies among our clients and assuring our place dealing with and serving the brilliant people in Metro-Detroit’s business community are at least as important.