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The first of six key metrics in the newest edition of the Enterprise Legal Management Trends Report covers the going law firm billing rates by practice area. The data is based on $18 billion in legal invoices processed through the CounselLink systems since 2009.
The data presented in the chart nearby (click here or image for higher resolution), is a bit tough on the eyes, but it’s also well worth examining closely for legal pricing insights. The data provides corporate counsel with an understanding of the rates they can expect to pay for a give matter type. For law firms, it provides a relative benchmark for ensuring pricing remains competitive.
What you see here is an updated version of the previous rendering of this data published in August 2014 which can be found here.
How to interpret the chart:
“As a guide to interpreting… consider IP-Trademark compared to Corporate, General, Tax. These two categories have high and nearly identical average partner rates – $450 and $447, respectively – but IP-Trademark work requires significantly less partner time. The result is a noticeably lower blended median rate for IP – Trademark work ($293) versus the same rate for Corporate, General, Tax ($365).”
Separately the full report also provides insight into volatility.
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Download the Newly Released Legal Spending Trends Report (PDF)
2014 Year-End Enterprise Legal Management Trends Report
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Billing Rate Volatility Index
The billing rate volatility index is calculated using a 10-point scale and demonstrates the spread between the 25th and 75th percentiles of hourly billing rates. A high volatility score indicates:
- a) “greater variance in prices paid based on the mix of timekeepers and individual hourly rates;”
- b) “a high volatility index could also be an indicator of a wide variety of matter types” for a given category.
The report provides an example:
“Using IP – Trademark compared to Insurance as an example, the spread between the 25th and 75th percentiles of blended hourly rates for IP – Trademark work is broader than that for Insurance. On a 10-point scale, IP – Trademark has a Volatility Index of 9, while Insurance has an Index of 3, indicating that the mix of timekeepers and rates paid on these matters varies more significantly than the mix for Insurance.”
Typically, “matter types have a relatively low Volatility Index, which means these rates are consistent and less subject to negotiations between corporations and firms.”
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