Location, firm size key to billing rates

The September issue of The American Lawyer offers a preview of the Real Rate Report, a study produced by CT TyMetrix Inc., a company that audits law firm bills, and The Corporate Executive Board Co., a company that provides best practices research and analysis. They studied the bills sent to 36 large corporate clients between 2007 and 2009 -- more than $4 billion worth of time sheets submitted by 90,000 people at 3,500 firms. They scrubbed the data to protect the identity of the billers and the billed. Then they got to work crunching the numbers.

A lot of interesting statistics jump out. For starters, legal bills increased at rates that exceeded inflation, in-house lawyers who spent more at a particular law firm were not getting any discounts, and partner status added nearly $100 on average to a lawyer's rate regardless of experience.

But what most struck us about the report was its portrayal of an industry fraught with inconsistency. The vast majority of lawyers -- 85 percent -- charge clients different rates for the same work. The location of the biller and the size of the biller's firm -- not the biller's experience -- are the variables that most influence how much a client will pay. And though in-house counsel talk a good game about keeping rates in check, they approve almost three-fourths of all timekeepers' rate hikes.

(Published by Law - September 8, 2010)