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16 May 2007

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William Henderson

Richard,

Excellent point. I had an exchange with Jack Heinz on the above findings, and he made the same observation. In other words, a lawyer in a 1 to 5 lawyer firm is a smaller market is more likely to have a practice that goes beyond personal services. Clearly, this has to be right.

Nonetheless, when I controlled for large metro, the local law school variable was still negative and statistically significant. So both your theory and the local law school hypothesis could be right. To disentangle these effects, we need a different sample with a broader geographic reach.

Richard Herzog

One distinction not discussed is that a five lawyer firm in a small town is likely to be the biggest firm in the county. It may represent the local banks, the county, the School board and the wealthiest farmers, businesses and individuals in town. A five lawyer firm in a large market is much more likely to represent ordinary individuals.

William Henderson

Carolyn, you raise an excellent point. I have no way of disaggregating which small firm lawyers are serving primarily corporate clients and which are serving individuals, though the 1-5 lawyer firms are more likely to have a non-corporate clientele.

Also, you are right that focusing on averages can obscure the full picture. Solos can make a great living--and have the autonomy that large firm lawyers lack. In my sample, the 90th percentile solos were making $175K in Indianapolis, $188K in other large metros, $195K in small/rural markets, and $225K in mid-sized markets. Obviously, the top 10% have even higher incomes. A couple of months ago, the ABA Journal ran a story on "Million Dollar Solos." So I want to be careful not paint small firm lawyers with a broad brush.

A major caveat is that I am dealing with Indiana lawyers. Washington, DC is a "Global City" that has a very large demand for specialized human capital. The high-end solos in that market may do especially well. Further, in most cases, solo and small firm lawyers have lower overhead than their Big Law counterparts.

Carolyn Elefant

Thank you for an interesting article - I posted on it here - http://legalblogwatch.typepad.com/legal_blog_watch/2007/05/lawyer_salaries.html

There were a couple of factors that are not clear from your study. First, did you examine all solos, or just those who serve consumer populations. It is my experience that solos who are handling telecom, antitrust or energy regulatory work (my specialty) often earn closer to biglaw salaries than those in a consumer oriented practice. Here in the DC area, there are many, many solo or two person shops doing traditionally biglaw work and opportunities are expanding. I would think that if these solos were included in the study, you'd find earnings in metro areas higher.

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