Real Rate Report

Survey shows law firms charging different rates for the same work

Firms are charging different hourly rates to different clients for doing similar work, according to an analysis of more than $4 billion in law firm billings that will be released in September.

Differences in billing rates are just some of the preliminary findings in the "Real Rate Report" by CT TyMetrix and The Corporate Executive Board. The report examines billing from more than 4,000 law firms, 50,000 individual billers and 18.9 million invoice items from 2007 to 2009.

The data was collected from CT TyMetrix's clients. Law firms and corporate legal departments have been using the company's web-based financial and e-commerce software to handle e-billing and matter management for more than 10 years. About $30 billion in legal invoices have flowed through the company's systems, said Julie Peck, vice president of corporate strategy and market development at CT TyMetrix.

And the results of the report, once released, will be aimed at helping general counsel make better decisions about how and where to spend their money. The findings will be broken down by several factors, including geography, law firm size, staffing and the types of matters handled.

"It will give general counsel an enormous amount of bargaining power," Peck said.

It's probably not surprising to most people in the legal profession that just over three-fourths of the 3,448 partners, associates and paralegals in the survey billed different hourly rates to different clients for similar work, Peck said. There are many reasons why their rates vary, from a client's negotiating power to whether the work was done under an alternative fee arrangement.

But the range of what a single person charges is surprising. The largest rate differences range from $350 an hour to $1,000.

"What that tells you is that there's a significant amount of pricing elasticity in the market, and that negotiation can be very powerful," Peck said.

The report also found that the median partner rate is significantly lower than reported. In 2009, partners at law firms charged up to $1,590 per hour for work with major corporate clients. But the median partner rate was $340 an hour. That means the rates that partners actually bill is lower than the typical "rack" rates reported by most surveys.

"In reality, there's so much negotiating going on, that's rarely the rate they actually get to charge," Peck said.

(Published by – May 26, 2010)

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