Despite the economic climate, lawyer billing rates continue to grow well past the rate of inflation with the most expensive lawyers getting increasingly more expensive, according to the 2012 Real Rate Report.
The Real Rate Report, released by TyMetrix Legal Analytics, includes analysis of more than $7.6 billion in law firm billings generated from 2007 through 2011 by more than 4,000 law firms, and roughly 120,000 billers — including about 80,000 partners and associates.
“The information in this report is intended to empower law firms and their clients to negotiate mutually beneficial rates and alternative fee arrangements with greater accuracy and confidence,” said Craig Raeburn, managing director, TyMetrix Legal Analytics.
“We believe the analysis of real data helps them fill a growing information gap so they can continue to make fact-based decisions regarding how to staff, budget and the control the costs of legal matters.”
Overall, the 2012 Real Rate Report suggests that the legal market is likely to continue to see rate increases for the foreseeable future.
The 2012 report saw lawyer rates continue to rise through the recession and recovery. After increasing 8.2 percent from 2007-2008, rates moderated briefly in 2008-2009 (just 2.3 percent increase), but resumed growing at a rate of more than 4 percent per year since 2009.
“In a post-recession environment, there’s greater pressure on in-house legal departments to demonstrate that they are getting value from their law firms,” said Brian Lee, managing director, CEB.
“As the legal market moves toward greater cost transparency, the Real Rate Report equips in-house lawyers with the information needed to estimate outside counsel costs, ensure budget accuracy, and ultimately make better decisions on resource allocations that impact their bottom line.”
The report also found that the most expensive lawyers are getting more expensive.
Rates for the highest billing partners ($800+ per hour) grew nearly three times faster than rates for the lowest billing partners (less than $300 per hour), and rates for the highest billing associates ($500+ per hour) grew nearly five times as fast as the lowest billing associates (less than $200 per hour).
Clients also appear to be willing to pay a premium for large law firm work.
The percentage increase for firms with more than 1,000 lawyers was double what the smallest firms experienced. The average hourly rates from 2009-2011 for law firms with 501-1,000 lawyers increased by 13 percent compared to a 4 percent rate increase at law firms with 1-50 lawyers.