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Category: Hourly Rate Survey

Study: Washington, DC Outpaces Peer Cities on Hourly Rate Growth

February 15, 2024

A recent Law.com story by Abigail Adcox “ ‘D.C. Was Our Best-Performing Region’: Billing Rate Increases and Demand Growth Drive Strong Year in the Beltway”, reports that law firms based in Washington, D.C., finished out 2023 with a strong financial performance, propelled by billing rate increases, expense control and robust demand within regulatory and litigation practices, according to results from a bank survey.

Among D.C.-based firms, gross revenue was up 7.6% in 2023 over the previous year, higher than the industry average of 6%, as the average billing rates in the region rose 8.8% compared with the industry average of 8.3%, according to Wells Fargo’s Legal Specialty Group’s year-end survey results.  Those results included eight firms headquartered in the D.C. region.

“D.C. was our best-performing region,” said Owen Burman, senior consultant and managing director with the Wells Fargo Legal Specialty Group.  “When talking to firms to really find out what drove it, the regulatory side was on fire for so many firms. And litigation overall has been supporting many firms this past year.”  In average revenue growth, D.C. firms exceeded peers in New York City (7%), California (6.6%), Texas (6.3%), Florida (5.9%), Chicago (5.2%), Philadelphia (4.7%) and Atlanta (4.4%), according to Wells Fargo data.

“The practice mix was very much in favor of D.C.-headquartered firms” in 2023, Burman said, citing robust demand within restructuring, antitrust and litigation practices, as other firms saw the impact of slowdowns in the transactional market.  It follows a lackluster 2022 for D.C. firms, which “underperformed,” as anticipated enforcement activities under the Biden administration didn’t come to fruition as expected, according to Burman.

However, in 2023, as demand picked up within regulatory and litigation practices, D.C. firms were able to control expenses and were less aggressive in hiring, contributing to their revenue growth.  Profits per equity partner were up 10.7%, compared with the industry average of 4.9%.  The number of full-time equivalent lawyers at D.C. firms also grew by 2%, slightly below the industry average of 2.8%. However, productivity at D.C. firms was down 1%, still better than the industry average (down 2.1%).

Demand among all lawyers was also slightly better at D.C. firms (0.9%) than the industry average (0.7%), but fell short of peers in New York City, which saw a 2% increase in demand.

Controlling Expenses

Meanwhile, total expenses grew 4.1%, the best out of all eight regions tracked, and above the industry average of 6%.  “They were able to control the expense growth much better than peers,” Burman said.  “Last year they were able to control the lawyer compensation pressures a bit more than other markets.”

Billing rate increases were in large part able to compensate for increases in lawyer compensation at D.C. firms last year.  “All together the rate increases are covering it.  The problem is that they were hoping it would cover other investments and now they have to redirect that money into supporting the lawyer compensation,” said Burman, adding that artificial intelligence and innovation investments are other top priorities for firm expenses.

Because of these expenses and other priorities, in 2024, D.C.-based firms may see more expense pressure, and they may be more in line with the industry averages in expense growth, he said.  Still, entering the year, D.C. firms are “optimistic,” Burman added, expecting strong demand within litigation and regulatory practices to continue.  “Their growth estimates are quite optimistic,” Burman said.  “Litigation, restructuring practices are still quite strong.  So those haven’t tailed off as we’re anticipating this rebound in transactions.”

ALM Covers NALFA’s 2023 Litigation Hourly Rate Survey & Report

February 2, 2024

A recent Law.com story by Michael Mora, “Where Miami Ranks in States Litigators Charge Highest Attorney Fee Rates,” reports on NALFA's 2023 Litigation Hourly Rate Survey & Report.  The story reads:

The National Association of Legal Fee Analysis released new intelligence providing micro and macro data of hourly rate ranges for both defense and plaintiff lawyers, which one attorney-fees expert said is the confluence of the coronavirus pandemic changing the geography in which people are living and working and the emergence of Miami on the national scene.

And that expert, Edward Mullins, a partner at Reed Smith in Miami, is not involved in the study.  The Am Law 100 firm attorney said he was surprised by the portion of all rates in Miami being at 18% in the most expensive tier and suspected that it is due to the influx of major law firms entering into the market in the last few years.

“Many of the new lawyers coming in are working not on local work, but more likely are doing work that is based in other areas like New York or other areas from where they are emigrating,” Mullins said.  “These new lawyers are integrating their N.Y. rates into the market and increasing the rates, but I don’t think that the rates charged for local work are increasing at the same pace.”

The NALFA empirical survey and report provides that micro and macro data, which, in addition to ranging from defense and plaintiff attorneys, does so at various experience levels, from the largest law firms to solo shops, in regular and complex litigation, and in the nation’s largest markets.  Over 24,800 qualified litigators participated in the survey.

Here, there are four categories: tier one, which ranges from $250 to $450; tier two, which runs from $451 to $700; tier three, which ranges from $701 to $950; and, tier four, which runs from $951 to over $1,300.

Nationally, Washington, DC, has the largest tier four percentage at 25%; then falling to a tie in second at 18% with Miami and New York.  For tier three, Washington has the highest percentage by far, at 51%; with San Francisco in second at 32%, and New York tied for third at 30% with multiple cities, including Boston and Los Angeles.

As for tier two, New Orleans and Las Vegas garnered the highest percentage at 44%; followed by Phoenix, Arizona, and San Francisco, at 43%; and, several cities fell closely behind, including Dallas and Denver with 42%.  And, for tier one, New Orleans has the most, standing at 39%, while Phoenix sits at 35% followed by Las Vegas at 33%.

NALFA Releases 2023 Litigation Hourly Rate Survey & Report

December 27, 2023

Every year, NALFA conducts a survey of prevailing market rates in civil litigation in the U.S.  Today, NALFA has released the results from its 2023 hourly rate survey.  The survey results, published in the 2023 Litigation Hourly Rate Survey & Report, shows billing rate data on the factors that correlate to hourly rates in litigation:

City / Geography
Years of Litigation Experience / Seniority
Position / Title
Practice Area / Complexity of Case
Law Firm / Law Office Size

This empirical survey and report provides micro and macro data of current hourly rate ranges for both defense and plaintiffs' litigators, at various experience levels, from large law firms to solo shops, in regular and complex litigation, and in the nation's largest markets.  This data-intensive survey contains hundreds of data sets and thousands of data points covering all relevant billing rate categories and variables.  This is the nation's largest and most comprehensive survey or study of hourly billing rates in litigation.

This is the fourth year in a row NALFA has conducted this hourly rate survey.  The 2023 Litigation Hourly Rate Survey & Report contains additional categories and more accurate variables.  These updated features allow NALFA to capture new and more precise billing rate data.

Through its propriety email database and digital infrastructure, NALFA surveyed over 495,000 attorneys from thousands of law firms and law offices from across the U.S.  Over 24,800 qualified litigators participated in this hourly rate survey over a 10-month period.  This data-rich survey was designed to aid litigators in proving prevailing market rates in court and comparing their billing rates to their litigation peers.

Why In-House Counsel Are Taking Historic Rate Hikes in Stride

June 9, 2023

A recent Law 360 story by Sue Reisinger, “GC Cheat Sheet: The Hottest Corporate News of the Week,” reports that, as several law firms have significantly increased their rates over the past year amid a slowing economy, the relative silence from corporate clients has been deafening.  Law 360 columnist Aebra Coe writes that based on her experience covering the legal industry during the fallout of the last economic downturn, the level of "meh" reactions around the increases is a major shift from the volume of outcry we heard from in-house legal during the 2010s.

So fast-forward to today.  Released at the end of May, the LexisNexis CounselLink 2023 trends report found that timekeeper rates grew on average 4.5% in 2022, the highest level the enterprise legal management platform had recorded since it first produced the report in 2013.  According to CounselLink, average partner billing rates at law firms with 750 or more lawyers increased from $656 in 2015 to $895 at the end of 2021, an increase of 36%.

And yet, Coe doesn't think we've seen the same revolutionary spirit in-house that we saw a decade ago.  Some structural changes are at play, including reducing the number of outside counsel used by legal departments, adopting alternative fee arrangements, using legal technology, outsourcing some lower-level tasks to alternative service providers, taking some work in-house, and making use of data to ensure outside counsel are performing to a high standard and providing value for the money.

Report: Sharp Rise in Partner Hourly Rates Last Year

May 22, 2023

A recent Law.com by Maria Dinzeo, “Law Firm Partner Hourly Rates Rose Last Year at Biggest Clip in at Least a Decade,” reports that hourly rates for law firm partners jumped 4.5% in 2022, driven in part by law firms’ fears of profitability losses from inflation and a drop in M&A activity, according to a report from LexisNexis CounselLink.  The report, based on $52 billion in legal spending across 420,000 timekeepers and 1.4 million legal matters, says that annual percentage increase was the largest since CounselLink put out its first report in 2013.

The largest portion of corporate spending went to partners at the 50 largest firms, those with 750 lawyers or more, where the average partner billed at a 46% higher rate than the next tier of firms with 501-750 lawyers.  The 50 largest law firms also saw their market share swell to 47.3%, particularly in regulatory and compliance, mergers and acquisitions and financial matters, where the 50 largest firms consumed 55% of legal billing in 2022.

“There’s all this increased regulatory pressure going on out there.  And who do you want to handle this stuff?  You’re gonna go to the firms that you think had the most insight into this and that’s going to be the big firms,” said report author Kris Satkunas, director of strategic consulting for CounselLink.  She also recently took a preliminary peak at this year’s numbers, and partner rates are on track to rise 5.4%, an even bigger increase than the 2022 record.  Those rates rose 3.4% in 2021 and 3.5% in 2020.

“It’s a very big leap compared to where we have been running for the last 10 years.  But that number will change.  Will it go up or down?  I don’t know,” she said.  “But that’s where things stand today through the first four months of the year.”  Satkunas noted that 25% of partners had increases of over 10% last year.  She said some legal departments also reported seeing double-digit rate increases.  The hikes could be attributed to firms beginning to feel the effects of inflation and less demand for certain types of work.  “I think there’s some fear about being able to hit profitability,” she said.

M&A activity also declined in 2022 after hitting an all-time high in 2020, experts say, when high demand for M&A work, with accompanying litigation, tax, real estate and intellectual property issues, gave firms more work than they could handle.  “M&A was the gift that kept on giving in 2020 and 2021,” said law firm consultant Kent Zimmermann of the Zeughauser Group.  “The massive demand for talent led to a big rate increase and that caused some firms to pull away a lot relative to their peers on profitability and talent advantage.”  Even though M&A work has slowed, Zimmermann said firms are still vying to attract the “best” lawyers as a path toward profitability.

“Even though demand is soft, that rate lever is still important,” he said.  “If there is any recession, it’s looking like it’s going to be short and shallow, so law firms are thinking.  We need to plan two to four years ahead.  We can’t under-do it on the rate increases.  It’s a big driver of our ability to enhance profitability and compete and attract the best lawyers.”

Some firms raised rates twice over the span of 12 months to keep up.  “The internal messaging was we need to pay to be competitive in the market for associates and their pay is going up,” Zimmermann said.  “You need the best and brightest associates and this is what it takes.”

If law firms have only two levers to profitability- raising rates or drumming up more work— raising rates is the easier of the two, Satkunas said.  “Typically, they are more comfortable raising rates.  It’s actually easier to raise rates and go find new customers or find new new work,” she said.  Though alternative-fee arrangements have grown more popular in recent years, this year’s report notes that their adoption remains largely unchanged, and represented 6.3% of total legal billings in 2022, according to the CounselLink report.

“At the end of the day, I believe that most corporate counsel are just more comfortable negotiating an hourly rate discount than being creative.  It’s easier to negotiate a rate than it is to have to think about, what’s the value of this matter, what am I willing to pay for the outcome I want?” Satkunas said.  “I’m disappointed and I really would love to see a real meaningful uptick in the use of AFA’s but it just hasn’t happened.”