HARTFORD, CONN., Apr. 16, 2012 — 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, jointly released today by TyMetrix Legal Analytics, part of Wolters Kluwer Corporate Legal Services that delivers the gold standard in legal analytics solutions for managing the business of law, and Corporate Executive Board (CEB), a leading research and advisory services company, is the legal industry’s only benchmark report for law firm rates that analyzes actual invoice data to quantify and explain what is driving the billable hour.
The 2012 report 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.”
Rates Continue to Rise
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.”
Other key findings from the 2012 Real Rate Report include the following:
- 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 Are 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.
- Lawyers Charge Different Hourly Rates to Different Clients For Similar Work. In 2011, 90 percent of lawyers charged different rates for similar types of work. Intellectual property and commercial contracts practices had the highest percentage difference in rates (23.1 percent and 18.7 percent, respectively), while regulatory and finance/securities/banking saw the lowest percentage difference in rates (about 11 percent).
- Higher Spend Equals Higher Rates - Consolidation Not Necessarily Associated with Lower Hourly Rates. Some in-house legal departments have had success consolidating work into a single law firm, but the data reveals that rates actually tend to increase as a law firm takes on more work from a client.
- Use of Entry-Level Lawyers Can Add Significant Costs to Legal Matter. The data confirms that the use of entry-level lawyers (associates with less than 2 years’ experience since passing the bar exam) continues to decline. Notably, the data also show that matters staffed with entry-level associates tend to cost as much as 20 percent more.
The 2012 Real Rate Report provides analysis, insights, and a robust section of rate tables for referencing key information like:
- Actual rates charged by law firms to corporate clients by geography, work and matter type, matter phase, timekeeper roles, including paralegal, associate and partner timekeeper practice areas and experience levels.
- Law firm staffing trends, including staffing profiles for different matter types, timekeeper billing patterns, and a breakdown of how billing has changed in the past five years.
- Portraits of typical corporate legal matters across law firms by type, length, and cost of specific matter phases, and timelines from service to billing.
- New section with analysis of selected international billing trends, which can help estimate cost of legal services in US and international markets.
The information used for the Real Rate Report is pulled from the TyMetrix Legal Analytics LegalVIEW™ data warehouse, which contains more than $24 billion in legal spend data aggregated from e-billing and time management solutions of TyMetrix clients and non-clients alike. Report analysis was conducted by CEB.
For more information or to order the 2012 Real Rate Report, please visit www.tymetrix.com. A complimentary copy of the report is available to members of CEB General Counsel Roundtable and CEB Corporate Legal Exchange.
About Corporate Executive Board
By identifying and building on the proven best practices of the world’s best companies, CEB helps senior executives and their teams drive corporate performance. CEB offers comprehensive data analysis, research and advisory services that align to executive leadership roles and key recurring decisions. CEB tools, insights, and analysis empower member companies to focus efforts, move quickly, and address emerging and enduring business challenges with confidence. CEB’s client and member network includes 85 percent of the Fortune 500, 50 percent of the Dow Jones Asian Titans, and 70 percent of the FTSE 100. It spans more than 50 countries, 5,700 individual organizations, and 225,000 business professionals. For more information, visit http://www.executiveboard.com/.
TyMetrix is the global market leader in delivering intelligent solutions that empower corporate legal departments, law firms and claims organizations to manage the business of law. It provides clients with quality legal management software, services and solutions, including e-billing, matter management and performance metrics, and the expertise required to manage risk, reduce costs and gain the insight required to meet their strategic objectives.
TyMetrix Legal Analytics, a complementary business to TyMetrix’s core software offerings, combines unparalleled analytical and legal domain expertise with LegalVIEW™ -- the world’s largest permission based contributory data warehouse of legal performance data -- to provide predictive and analytical models, benchmarking and insights to legal departments and all professionals involved in managing the business of law.
TyMetrix is part of Wolters Kluwer Corporate Legal Services, the leader in legal process and business performance management. For more information, please visit www.tymetrix.com.
About Wolters Kluwer Corporate Legal Services
Wolters Kluwer Corporate Legal Services is the leader in legal process and business performance management. It delivers the people, products and processes to drive transparency, ensure accountability and provide organized, accurate and actionable information for legal, financial and insurance professionals. CLS’s business brands — CT Corporation, NRAI, BizFilings, Corsearch, CT Lien Solutions and TyMetrix — empower organizations to make better business decisions and be more efficient in today’s highly transparent business environment.
Wolters Kluwer Corporate Legal Services is a business of Wolters Kluwer, a market-leading global information services company. Wolters Kluwer has 2010 annual revenues of €3.6 billion ($4.7 billion), employs approximately 19,000 people worldwide, and maintains operations in over 40 countries across Europe, North America, Asia Pacific, and Latin America. Visit www.wolterskluwer.com.