Unlike many clients’ organizations, law firm rates have increased regardless of the larger economic situation according to the 2012 Real Rate Report. Although rate increases were relatively restrained during the recession, rates still increased nevertheless. And in the past two years, lawyer rates have resumed growing well past inflation.
Rates for the highest billing lawyers, those who bill $1,000+ per hour, have been growing nearly three times faster than those of the lowest billing lawyers: a 75% increase since 2009. Rates for lower priced lawyers, however, have only seen a slow increase as they have been facing greater competition from LPOs and contract attorneys.
Fees for Finance and Securities, Regulatory, and M&A practices have increased the most; litigation and real estate increased the least. Clients have been paying a premium for lawyers who work for larger firms, as law firm size is one of the five main cost drivers. Unless necessary due to geographic need, specialty, or “brand,” sophisticated clients carefully consider which firms are most cost-effective. As a result, firms need to understand the situation of the client and the value attached to a matter to price accordingly.