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Some lawyers earn less than checkout operators: National survey finds

As lawyers abandon the old model of charging by hourly rates and switch to fix fees, their net hourly earnings are dropping to less than those of checkout operators.

 

The surprising finding comes from a national survey of 412 law firms sponsored by Smarter Drafter, a legal automation company that cuts up to 20 hours out of a lawyer’s work week.

 

 

In the survey, lawyers reported on the range of fees they would charge for services, and the time they would take to deliver on these services. The survey was prompted by the industry-wide shift to fixed-fees, a shift driven by pressure from clients, who are less and less willing to allow lawyers the liberty of charging by the hour.

 

Dividing the fees that lawyers charge, by the hours required to deliver that service, has led to some surprising results, including:
 

  • A CBD Law firm that would earn only $20 per hour for the work they put into advanced wills with testamentary discretionary trusts.

  • A regional firm that would earn only $17.78 per hour for the work they put into a Sale of Business Agreement.
     

With payscale website Indeed quoting the hourly rate for a checkout cashier at $21 per hour, it will be a surprise for many lawyers to realise that their net hourly rate comes out lower.

 

Adam Long, Chief Evangelist of Smarter Drafter (the survey’s sponsor) said: “Many lawyers have switched to fixed fees and struggle to explain their value to clients, who insist on negotiating lower fees. I think lawyers would be quite surprised to work out their equivalent hourly rate once they add up all the time it takes to deliver the work.”

 

The survey also found that firms that adopted legal automation were netting historically high equivalent hourly rates, up to $1,000 per hour of work. These firms use tools like Smarter Drafter to get behind-the-scenes work done in minutes, instead of hours and days.

 

One CBD firm reported a net income of $916 per hour of work on estate planning, thanks largely to their use of automation. Another firm, based in a regional area, reported earning $750 per hour for providing a non-disclosure agreement to clients.

 

Adam Long, Chief Evangelist of Smarter Drafter (the survey’s sponsor) said: “Clients are going to continue to demand fixed fees, and over time, competition will drive down these fees. It’s up to the lawyers to differentiate their value up front, and explore automation as a necessary efficiency measure.”

 

The full survey results are available to journalists for a limited preview. If you would like more information or to schedule an interview please contact Smarter Drafter Managing Director David Lipworth, +61 2 9137 2167, david.lipworth@smarterdrafter.com.au

 

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