Partner rate increases growing and more widespread, new report says
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Partner rate increases at the largest firms continue to grow and are more widespread, according to a LexisNexis report released Tuesday.
Partners at the largest 50 firms with more than 750 attorneys have billing rates 45 percent higher than partners at firms that have between 501 and 750 lawyers. This is an increase of 11 percentage points over 2016’s figure.
“Both groups are raising their rates, but the largest firms are raising them more on average,” Kris Satkunas, director of strategic consulting for CounselLink and author of the report, says in an email. She explains that beyond raising rates by a larger margin, the largest firms also “have the largest share of the highest priced work (M&A, Corporate, Regulatory).”
The fifth annual report focuses on six metrics: blended hourly rates, law firm consolidation, use of alternative fee arrangements (AFAs), and partner hourly rates by firm geography, practice and size.
Nationally, partner rates have increased an average of 3.2 percent. California, Georgia and Oregon were among the states with the highest increases, all between 5.4 percent and 5.6 percent, but all three states had different median partner hourly rates. Georgia’s was $340 while Oregon’s was $410 and California’s was $500. Minnesota had the highest rate increase at 6.1 percent with a median partner hourly rate of $400.
Boston, Chicago, Los Angeles, New York and Seattle all had rate growth of at least 4 percent over the past three years, the report says.
AFAs have seen a modest decrease over the past year, but remains consistent with previous reports, says Satkunas. According to the report, 9.2 percent of matters and 7.4 percent of billings were AFAs in 2017, which is down 0.7 percent and 0.1 percent respectively. Bucking this trend are merger and acquisition matters, which doubled its use of AFAs in the past year to 10 percent.
This is notable as mergers and acquisitions, according to the report, are the most expensive partner hourly rate by practice area clocking in at $678. In comparison, IP-Trademark matters billed at $545 an hour and at the back of the pack was insurance matters at $195 an hour.
With this information, the report argues that, “Legal departments can compare their own data against these rates and ranges for help in managing costs,” continuing, “there may be an opportunity to negotiate lower rates or to request a different mix of timekeepers to reduce costs.”
The data for this report was collected through LexisNexis CounselLink, a cloud-based legal management product for corporate counsel. The data also accounts for more than $30 billion in legal spending by outside counsel, which is made up from about 7 million invoices and approximately 1.7 million matters processed through the platform in 2017.
