He pointed to a report released in April by legal analytics company TyMetrix, which reviewed billing rates at some 4,000 law firms during the past five years. The study found that rates grew three times faster for the highest-billing partners than for the lowest-billing partners. At the same time, rates rose five times faster for the highest-billing associates than for the lowest.
Although more clients are demanding alternative fee arrangements, slow widespread adoption of that billing method means that lawyers can continue to raise hourly rates, said Joel Henning, a consultant to law departments and law firms. There's been much talk from clients and law firms about tailoring legal fees based on flat fees or litigation milestones, but "there's lethargy on both sides," said Henning, principal of Joel Henning & Associates in Chicago.
Only 6 percent of law firms use alternative fee arrangements, according to a survey released in July by ALM Legal Intelligence (ALM owns The National Law Journal). Just 12 percent of legal departments said they use those arrangements for more than half of the work they assigned to outside counsel in 2011.
"They keep talking about how the tide has turned, but I don't think it really has," Henning said.
REGIONAL RESULTS
Not surprisingly, the biggest firms in the biggest markets generally had the highest rates. Several firms that have their largest offices in New York and Washington had median rates above $500, according to the NLJ survey. By contrast, firms based in smaller markets including St. Louis, Denver and Detroit had median rates below $400 per hour. Some of the cities with the highest billing rates, according to TyMetrix, are Boston, Chicago, Houston, Los Angeles, San Francisco, New York and Philadelphia.
Wherever the attorney is based, determining how much he or she can charge is a bit of a group effort, said Silow of Fox Rothschild. Each year, he meets with the firm's chief financial officer and reviews the partners' collection efforts. If they're pulling in the vast majority of what they're charging, it's a sign that those attorneys can boost their rates. If collections are lower, there may be less capacity to increase them, he said.
And in almost every practice area among top law firms, there are attorneys who can consistently bill at high rates and who collect on those numbers, Silow said. "There are lawyers who are just that good," he said.
This article originally appeared in The National Law Journal.
This article originally appeared in The National Law Journal under the headline “For top work, firms rule on rates.”
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