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9 Geo. J. Legal Ethics 925 (1995-1996)
The Impact of Pro Bono Work on Law Firm Economics

handle is hein.journals/geojlege9 and id is 935 raw text is: The Impact of Pro Bono Work on Law Firm Economics JACK W. LONDEN* How much does pro bono work cost a law firm? As with many questions, the most obvious answer is wrong. The most obvious measure of the economic impact of pro bono work is the hours of legal work done without charge multiplied by the hourly rates of the timekeepers involved. But to use this measure is to assume - incorrectly, in most cases - that, but for the pro bono work, the law firm would have spent the same amount of time on billable work, and would have collected full hourly rates from paying clients. Law firms do not forego attractive paying work to leave room to do pro bono work. For smaller firms, the unavailability of particular lawyers is likely to cost the firm billable matters. Larger firms maintain staff levels enabling them to take on all the attractive paying work they can get, with additional capacity, almost always, for some additional paying matters. When the firm approaches full capacity, it calls on its existing staff to stretch, while accelerating new lawyer hiring, rather than turning down attractive billable matters. Thus, especially for larger firms, lost revenue because of lack of capacity is a short-term phenomenon at most. If pro bono work does not represent lost revenue, what is its economic impact? It is mainly as an increment of a law firm's personnel costs. A law firm employs the right-sized staff to handle all the billable work that it expects to attract, plus the other tasks including business development, firm administration and pro bono work. The firm also usually has some additional capacity before hitting the limit on hours that the firm's lawyers are willing to work. In principle, this means that the cost of pro bono work can be estimated as its percentage of the firm's activities, multiplied by the firm's total attorney and legal assistant personnel costs.' That pro bono work is mainly a cost increment rather than a loss of revenue makes a big difference in dollars. Every extra hour of revenue goes right to the * The author is a partner at Morrison & Foerster, L.L.P., and chair of its Pro Bono Services Committee. He is a member of the American Bar Association's Standing Committee on Lawyers' Public Service Responsibility, the Executive Committee of the Lawyers' Committee on Civil Rights Under Law and the Board of Directors of the National Legal Aid and Defenders Association. 1. In reality, the cost of pro bono work is lower than this estimate would suggest. A significant portion of pro bono work is done with time that the firm could not convert into personnel cost savings even if it tried to do so. Thus, the opportunity cost of a pro bono program is probably lower than the percentage of pro bono hours to total hours multiplied by total attorney personnel-related costs.

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