Top law firms boost hourly rates for equity partners by 3.9%, leaving mid-tier firms $400 behind
The most profitable law firms have pulled far ahead of second-hundred firms in their hourly billing rates, according to a study of rate increases between 2014 and 2015.
The most profitable firms raised average billing rates for equity partners by 3.9 percent, with an average billing rate of $1,085, according to the study by Wells Fargo Private Bank. The most profitable firms were defined as firms with profits per partner of at least $2 million and revenue per lawyer of at least $1 million. Law.com (sub. req.) covered the findings.
The average rate increase for equity partners at law firms across the Am Law 100 was 3.4 percent, for an average hourly rate of $875. The average increase for equity partners in second 100 firms was 2.3 percent, for an average hourly rate of $650.
The leaves a “huge” gap of more than $400 between the average hourly rate charged by equity partners at top law firms and those in the second 100, according to Jeff Grossman, a senior vice president at Wells Fargo Private Bank’s legal specialty group. He spoke with Law.com about the findings.
There were also gaps in hourly rate increases for all partners. They were up 3.8 percent at the top firms; up 2.9 percent in Am Law 100 firms, and up 1.4 percent in Am Law second 100 firms.
Grossman said the mid-tier firms are seeing the most rate pressure. “At many of those firms, there aren’t a lot of distinguishing factors. They’re not known as the best IP or private equity firm, for example. They tend to be full service, with diversified practices, and that’s where we’re seeing the most compression.”
The study asked law firms about their “rack rates” before discounting.