A recent Am Law Daily story, “Billing Survey Shows Rates Ticking Up as Demand Dips,” reports that corporate clients purchased fewer hours from law firms in 2013 than they did the year before, even as they paid more for what they bought.  Hours were off by 1.3 percent, while fees were up by 1.6 percent.  The revenue gain was powered by a 5 percent year-over-year increase in collections during the fourth quarter of 2013.  These are among the most telling results of the latest LegalView Legal Market Index, which is produced by TyMetrix, the giant electronic billing clearinghouse and data analytics and advisory company.

The index is based on the purchase of legal services by 70 large corporate clients spread across eight industry groups that range from financial services and heath care to industrials and technology.  The LegalView 70 includes big companies: 21 are in the Fortune 500; another 12 belong to the Fortune 1000.  These clients hire a lot of firms: In each quarter last year these companies used 181 to 183 of the Am Law 200 firms and more than 3,000 others.  All told, according to the TyMetrix data, the companies spent $5.1 billion on outside legal services over the last two years.

The LegalView Index is different from other measures of the legal market.  It is based on actual dollars paid by clients, not on surveys of law firms.  In one such survey, Citibank Private Bank Law Firm Group last month reported its findings for 2013 based on returns from 126 of the Am Law 200 and 54 other firms. The bank said that in its survey sample found gross revenue up by 2.5 percent.

Overall, attorney hours purchased by the LegalView 70 were down year over year, in the first three quarters of 2013.  Fees, meanwhile, were up in every quarter but the second.  For analytical purposes, TyMetrix divides its report into three groups: The Am Law 100, the Am Law Second Hundred, and non-Am Law Firms.  According to the Index, only the Am Law Second Hundred showed year-over-year increases in both purchased and fees paid in all four quarters of 2013.

While demand for hours was down overall, the pain was not distributed evenly.  In 2013, the LegalView 70 paid for 8,065,356 hours, 105,173 fewer hours than the same companies purchased in 2012.  Firms in the Am Law Second Hundred showed an overall gain of 25,278 hours, or roughly 3.1 percent.  The loss by the Am Law 100—down 66,617 hours, or 2.8 percent—and by firms outside The Am Law 200—down 63,834 hours, or 1.3 percent—dwarfed that modest gain.

Another way to view the data is a simple market-share analysis.  Using the index numbers, clients brought a disproportionate share of lawyer hours—29 percent—from the Am Law 100 firms.  By contrast, the Second Hundred firms logged 10.5 percent of the hours purchased in 2013.

Fees followed a similar pattern.  Overall, they were up by $40,360.67, or 1.6 percent.  Both the Am Law Second Hundred and non-Am Law firms reported fee increases last year.  Fees for the Second Hundred firms bumped up $13.8 million, or 4.9 percent; non-Am Law firms’ fees were up by $29 million, or 2.5 percent.  The Am Law 100 firms were down by $3.5 million to $1.105 billion, or three-tenths of 1 percent, essentially flat.