Rates on the Rise
California Lawyer

Rates on the Rise

July 2012

One legal question never seems to go out of style: How much are lawyers charging?

The latest research in the 2012 Real Rate Report suggests that hourly billing rates have been climbing steadily. Although during the recession there was a brief lag in the rate at which legal fees increased, they rose nonetheless. And between 2009 and 2011, nearly one in five lawyers upped hourly fees by $100 or more - well above the inflation rate.

"It's surprising, given the amount of lip service given to law firm rates staying the same or even decreasing over time," says Brian Lee, a managing director at Corporate Executive Board, which conducted the study along with TyMetrix. "Even during the recession, law firms are finding ways to increase their prices."

Among the report's findings:

  • Practicing in the Bay Area pays off ... sort of. San Jose was ranked third in the country (behind New York City and Washington, D.C.) for the highest average hourly rates, at more than $600 for partners and more than $400 for associates. San Francisco ranked sixth, at more than $550 for partners and more than $350 for associates. But it's worth noting that both cities are in one of the ten most expensive U.S. metropolitan areas.
  • Practicing in Riverside doesn't. Among 60 metro areas surveyed, the nation's lowest average hourly rates for lawyers are in Riverside, where partners bill about $255 per hour and associates just over $150. That is nearly $500 an hour less than the average partner rate in New York City.
  • There's plenty of room at the top. The percentage of partners charging more than $1,000 per hour zoomed up by 75 percent between 2009 and 2011. Almost half of these mega-billers practice finance law; corporate, commercial, and contracts lawyers also are heavily represented.
  • Some clients just pay more. On average, 90 percent of lawyers billed different rates to different clients for similar types of work. The median difference in rates for all practice areas was more than 10 percent.
  • It's not what you practice, it's where you practice. In the legal profession, like real estate, it's all about location, location, location. A law firm's locale and size are the top two predictors of higher legal rates. Being a partner and having years of experience trail in statistical importance, and practice area is the least significant variable.

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