Law firm invoices reveal increased discounting amid COVID-19 crisis as use of AFAs continues to increase and largest 50 firms continue to dominate high rate work
RALEIGH, N.C., July 14, 2020 – LexisNexis® CounselLink®, a leading cloud-based enterprise legal management solution for corporate law departments, today announced the release of its 2020 Enterprise Legal Management Trends Report. Now in its seventh year, the Trends Report is based on more $35 billion in legal spend comprised of almost seven million invoices and more than 1.7 million matters.
The new report provides updates on six key metrics based on 2019 charges billed by outside counsel as well as insights around legal spend management since the COVID-19 crisis in which legal departments have found themselves under even more pressure to manage outside counsel expenses. As a result, law firm invoices reflect a notable trend in increased discounting in the last three months. Other key findings include:
- Use of Alternative Fee Arrangements Continues to Increase: AFAs continue to gain favor among corporate counsel. In 2019, 12.1% of matters were billed under some form of alternative billing, up from 9.2% in 2017.
- Largest 50 Firms Continue to Dominate High Rate Work: Partner billing rates were significantly higher (by 51%) for lawyers in the “Largest 50” firms (750 or more lawyers) compared to partner rates in firms with 501-750 lawyers in 2019. However, the largest year-over-year increase in median partner rates occurred at firms with 201-500 lawyers, where rates grew 7%.
- The Larger the Firm, the Larger the Timekeeper Rate: Partner billing rates for lawyers in the “Largest 50” firms, which have more than 750 lawyers, are 51% higher than those of partners in firms with 501-750 lawyers. And partner billing rates in firms with 201-500 lawyers are 29% higher than those for partners in firms with 101-200 lawyers.
CounselLink continues to gather 2020 data that reveals leading indicators of how the legal landscape is changing and legal departments are responding in the wake of the COVID-19 pandemic.
Relative to prior years, 2020 invoices reflect a notable trend in increased discounting in the last three months. Historically, calendar year-end is the only time that 16% or more of invoices are discounted, whereas in 2020, May has crossed that threshold.
“As organizations seek to rein in 2020 expenses, the pressure on GCs to do their part means a continued focus on outside counsel spending,” said Kris Satkunas, Director of Strategic Consulting for CounselLink and author of the Trends Report. “We recommend legal departments use efficient, scalable approaches to reducing outside counsel bills to navigate these uncertain times. Additionally, given trends that reflect reduced demand for legal services, coupled with greater discounting of legal bills, GCs need to be mindful of the cash flow challenges potentially being faced by their law firms.”
These six metrics are derived from data processed through CounselLink’s $35B benchmarking database and provide concrete examples of what legal departments are currently doing. Organizations can leverage these insights throughout the department’s decision-making process. CounselLink has earned an industry reputation for enabling corporate law departments to use data effectively as a basis for improving legal department performance and outcomes.
The full CounselLink Trends report is available for download here.
CounselLink is a leading cloud-based software solution for Enterprise Legal Management (ELM), including work management, financial management, vendor management, and legal hold solutions designed to help corporate legal departments manage operations while providing analytics and benchmarking tools for better decision-making. Expert professional services and product support teams are available to help users maximize the benefits of their investment. CounselLink also offers tiered package options to address the unique requirements of both large and small legal departments. Discover more about CounselLink online: https://counsellink.com
About LexisNexis Legal & Professional
LexisNexis Legal & Professional is a leading global provider of legal, regulatory and business information and analytics that help customers increase productivity, improve decision-making and outcomes, and advance the rule of law around the world. As a digital pioneer, the company was the first to bring legal and business information online with its Lexis® and Nexis® services. LexisNexis Legal & Professional, which serves customers in more than 150 countries with 10,600 employees worldwide, is part of RELX, a global provider of information-based analytics and decision tools for professional and business customers.