August 10, 2020
NALFA conducts custom hourly rate surveys for law firms, corporate legal departments, and government agencies. Our hourly rate surveys provide our clients with the most current and accurate hourly rates within a given geography and practice area. Starting this year, 2020, NALFA is conducting hourly rate surveys in 5 key practice areas. These billing rate surveys show the current average hourly rate range for both plaintiffs' and defense counsel at partner and associate levels.
NALFA has released 3 different models of growth (linear, logarithmic, and logistic) for hourly rate ranges in litigation. These growth curves are based on the universally accepted principle that hourly rates increase with experience (i.e. partner rates are greater than associate rates). Linear growth is consistent straight-line growth. Generally, logarithmic growth rises sharply then levels off. Generally, logistic (S-shaped) growth starts slowly, rises sharply, then levels off. We did not use exponential (J-shaped) growth because an ever-increasing, very steep curve does not fit hourly rate billing economics.
“These growth models do not account for the factors that effect hourly rates such as geography, practice area, party to litigation, complexity of case, size of law firm, and economics that our surveys do,” said Terry Jesse, Executive Director of NALFA. "Those variables were not a part of this purely mathematical exercise," Jesse emphasized.
From these growth curves, we learn 2 key concepts:
1. Logarithmic growth seems to represent the economics of hourly rates and the career span of litigators the best. Generally, the growth starts rapidly, then increases slower, then eventually levels off. Here, the highest rate of billing growth takes place in early-career.
2. Logistic growth is another model that has some appeal to the economics of hourly rates and the career span of litigators. Generally, the growth starts slowly, then increases rapidly, then eventually levels off. Here, the highest rate of billing growth takes place in mid-career.
The parameters of these models include the number of years continuously practicing litigation (12 data points), plotted along the x axis and hourly rate ranges (20 data points) along the y axis. The litigation experience data sets range (less than 2 Years-35+ years) has a variance of 1 year to 5 years. The hourly rate ranges (less than $200-over $1,200) include a variance of $50 and $100.