Comparing Firm Billing Rates by Practice, City, Size

For in-house counsel who want to do some comparison shopping on law firm billing rates, a new analysis from TyMetrix Legal Analytics and CEB shows that firms charged the most for finance and securities work last year, and that partner rates in New York outpaced those in any other U.S. or Canadian city by more than $100 an hour.

The “2013 Real Rate Report Snapshot” draws on $9.5 billion worth of invoices submitted to 83 corporate clients from 2008 to 2012. The dataset encompasses more than 4,800 U.S. law firms and 29.1 million hours billed by partners, associates, and paralegals.

The average hourly rate in 2012 for partners was $536.47, and for associates it was $370.25.

Based on its analysis of a control group of lawyers, TyMetrix found that while rates for both partners and associates continued to increase in 2012, they did so at a slightly slower pace than the previous year, says David Moran, the company’s director of data management.

Partner rates went up 3.1 percent in 2012, compared to a 4 percent increase in 2011. Similarly, average associate rates increased 7.4 percent in 2012, versus 8.5 percent the year before.

What is especially useful for law departments, says Moran, is to view how rates differ when broken down by categories such as practice area, city, and law firm size.

“The tables [in the report] really are helpful to the corporate clients because it gives them a snapshot in time of what were acceptable bills,” Moran says. (Note that the data is based on approved billing rates at the time of submission to clients, so any discounts or alternative fee arrangements negotiated after that point in time aren’t captured in the report.)

By practice area, finance and securities work garnered the highest average partner rate last year at $673.04, followed by mergers and acquisitions at $636.50, and commercial and contracts at $608.73.

A firm’s geographic location is a key driver in how rates vary. In St. Louis, for example, the 2012 average rate for partners was $354.17. So in hiring outside counsel there, a law department can say, “For a partner or associate in that area, I should not be paying a New York rate,” explains Moran.

Indeed, New York tops a list of 12 cities with the highest average partner rates for 2012—all with hourly rates above $500:

1. New York: $755.68
2. San Francisco: $651.33
3. Washington, D.C.: $649.24
4. San Jose, CA: $634.98
5. Toronto: $634.24
6. Los Angeles: $620.34
7. Boston: $598.69
8. Chicago: $585.47
9. Calgary, AB: $578.13
10. Houston: $549.25
11. Dallas: $510.32
12. Philadelphia: $516.56

Law firm size, not surprisingly, has an important effect on rates, too—the bigger the firm, the bigger the hourly bill. Here’s how hourly rates compare according to the number of lawyers in a firm, again through the lens of average partner rates in 2012:

• 1 to 50 lawyers: $342.95
• 51 to 100 lawyers: $380.35
• 101 to 250 lawyers: $422.35
• 251 to 500 lawyers: $531.62
• 501 to 1,000 lawyers: $638.23
• More than 1,000 lawyers: $727.02