October 31, 2017
A recent New Jersey Law Journal story by David Gialanella, “NJ Hourly Rates Near the Top Nationwide, Report, Report Finds” reports that New Jersey trails only a handful of markets when it comes to average hourly billing rates for law firms, a recent report has found.
The state’s $272 average hourly rate for 2016, which takes into account both lawyer and nonlawyer rates, ranks sixth in the nation, behind New York ($297), Connecticut ($296), the District of Columbia ($292), Nevada ($285) and California ($277), according to the “2017 Legal Trends Report” issued by Clio, a Canadian cloud-based researcher that tracks legal industry metrics.
New Jersey’s $272 average combined rate placed it ahead of markets such as Illinois ($261), Maryland ($257) and Pennsylvania ($243), the report stated. New Jersey also was sixth in lawyer hourly rates, at $288, again behind the same five markets, which all topped $300 per hour.
The average nonlawyer billing rate for New Jersey was $199 — second only to Connecticut, whose $228 rate was highest by far. New Jersey’s average nonlawyer rate put it firmly ahead of Nebraska ($175) and Nevada ($174), as well as Pennsylvania and New York (each $171), according to the report.
“Real” hourly billing rates, which are adjusted for cost of living in 2016, also are included: In New Jersey, that rate is $251 for lawyers, $174 for nonlawyers and $237 combined. The latter number trails the same five markets mentioned above, as well as Florida, Illinois, Texas, Georgia, Arizona and Pennsylvania. The data was collected from some 60,000 Clio users, as well as surveys of legal professionals and consumers of legal services, the report notes.
The report is critical of law firms for what it calls poor “utilization” rates—contending that lawyers on average nationwide spend only 2.3 hours of the eight-hour workday on billable tasks. It pegs the utilization rate in New Jersey at 30 percent, which is one point higher than the national rate of 29 percent (meaning that a New Jersey lawyer spends 2.4 hours per day on billables, rather than 2.3 hours). The report ranks lawyers in West Virginia and Maine at the top in this category, with realization rates of about 40 percent.
New Jersey is toward the back of the pack when it comes to realization rates, the report finds: At 79 percent, the state ranks 34th and is well behind Utah, South Dakota, South Carolina, Wyoming and New Hampshire, which approach or eclipse 90 percent, but still ahead of such large markets as New York (39th), Florida (43rd), Delaware (46th) and D.C. (48th), according to the report.
New Jersey also fares badly in collection rate, according to the report. At 82 percent, it was ahead of only six markets in that category: Arizona, New York, West Virginia, D.C., Mississippi and Michigan.