Conventional wisdom suggests that rates are driven by expertise, such as your practice area, and (years of) experience. However, data from the 2012 Real Rate Report shows that these factors are less important than expected. A lawyer’s rate is more determined by law firm size and location than by a lawyer’s partner status, experience, or practice area.
The statistical model identified the relative importance of different factors on an individual lawyer’s rate through linear regression. The model has an adjusted R2 of 54%, meaning that 54% of the variation in legal fees can be accounted for by the above-referenced five variables alone.
Law firm size has the most important statistical impact on rates, adding roughly $15 per 100 lawyers in a firm to the statistical base of $151 per hour. Being located in a tier 1 market — New York, Chicago, DC, Boston, Houston, San Jose, and San Francisco – is the second most important influence on rates, adding $161 to an hourly rate. Partner status ranks third among statistical impacts, adding $95. Experience ranks fourth, accounting for $34 per 10 years’ experience. Among practice areas, only finance and litigation showed statistical impact, finance adding $99 per hour, litigation subtracting $15.