Nearly nine out of 10 law firms are habitually offering discounts on their headline billing rates according to new research, which casts doubt on the value for money offered by commercial law firms.

The latest Big Question poll of partners found that 88% of firms are typically offering discounts on their headline rates, with 42% usually discounting by 5%-10%, while just over a third usually cut rates by 10%-20%. One in 10 respondents said that their firms were regularly discounting headline rates by 20%-30% while 12% said their firms generally avoided discounting.

The survey also found that partners have a surprisingly jaded view of the value for money of their own services, with nearly half (46%) arguing that the charge-out rates of major firms are either 'poor value' or 'could be better'. Twenty-six percent thought law firms offered 'good' or 'excellent' value, while one in four viewed pricing as merely 'OK'.

The findings suggest that the downturn is continuing to impact substantially on rates. Asked which band best describes hourly charge-out rates for UK partners at their firm, nearly half said 'up to £450′. Thirty-one percent cited the £450-£550 band, while 20% put it at £550-£650. Only one respondent put the rates in the region of £650-£750.

The results also suggest that the perception of charge-out rates at top-tier firms may be higher than the reality. Asked to gauge their view of partner charge-out rates at such firms, 43% said £650-£750, while a further 5% said 'more than £750′.

Clyde & Co chief executive Peter Hasson said: "Pricing for partners is the most competitive band at the moment and is the area that clients tend to mostly focus on. Hourly rates are still the most typical for our big-ticket litigation work, although we have also seen conditional fees increasing, and fixed fees are also commonly used in our transactional work."

Meanwhile, 42% of respondents said that charge-out rates for mid-level associates at their firms were up to £300 an hour, followed by 35% who said that they were between £300 and £350.

Nearly half of all participants stated their firms charged between £200 and £250 an hour for junior assistants, with 2% suggesting a much higher price of between £350 and £400.

Hogan Lovells finance partner Penny Angell said: "There is no one grading of lawyers that has particularly suffered a hit in terms of how much clients will pay for them but, for banking panels especially, there is often now a fixed price that they will pay for a lawyer at each level.

"It is definitely the case that clients are looking for alternative ways of charging and the transactional banking market is mostly working on an effective fixed-fee basis now, which I think will continue."

The idea of fixed fees was flagged by Berwin Leighton Paisner corporate finance partner Patrick Somers, who commented: "We use hourly rates as one of a number of internal financial measures. It is now very rare for us to work on an hourly-rate basis. Hourly rates do not encourage efficient working practices."

Ashurst head of corporate Stephen Lloyd said: "There is much more focus on abort fees, caps and other flexible deal structures, so in a sense charge-out rates are less relevant than before – they are really a management tool to help in pricing jobs correctly.

"I don't think there has been very significant movement in rates or recovery yet, although it is possible to detect a marginal improvement as confidence returns."

Partners on charge-out rates

- 88% of firms typically discount their rates
- 79% of partners charge £550 an hour or less
- 46% have a negative view of the value of law firms
- 25% of firms charge out mid-level associates at more than £350 an hour