It appears that modest annual billing rate increases are here to stay. For the third year in a row, law firms showed restraint with hourly rate increases, inching up at a rate only slightly higher than inflation in many cases. The average firmwide billing rate, which combines partner and associate rates, increased by 4.4 percent during 2011, according to The National Law Journal‘s annual Billing survey. That followed on the heels of a 2.7 percent increase in 2010 and a 2.5 percent increase in 2009 — all of which paled in comparison to the go-go, pre­recession days when firms could charge between 6 and 8 percent more each year.
 
It’s a buyer’s market
“Before the recession, I think we had a seller’s market,” said Altman Weil consultant Ward Bower. “There was so much demand that law firms were in the driver’s seat and could get what they wanted. Clients are in the driver’s seat now, and they aren’t going to pay those increases. They’re exerting much more control over pricing, strategy and staffing decisions.”
 
BY THE NUMBERS
 
A nationwide sampling of law firm billing rates
We asked the respondents to our 2011 survey of the nation’s 250 largest law firms to provide a range of hourly billing rates.
 
Firms report using alternatives to the billable hour
Law firms report on the percentages of revenue obtained through variations on the billable hour and true alternatives.
 
Firms report their billing rates by associate class
A sampling of hourly rates charged by law firms that establish billing rates based on associate class.
 
FURTHER READING: See last year’s survey.