In Biglaw, as in capitalism generally, the rich just keep on getting richer.
According to CounselLink’s 2020 Enterprise Legal Management Trends Report, the more attorneys that are employed at a firm, the more money that firm in able to command in its average billing rates. The biggest 50 law firms have an average partner billing rate of $575 per hour, which is 51 percent higher than the next band of firms. Those that are slightly smaller, with 501-750 attorneys, are averaging partner billing rates of $380 an hour. And it keeps on going down from there, with partner billing rates at firms with 201-500 lawyers 29 percent higher than those with only 101-200 lawyers.
As reported by Law.com, Kris Satkunas, director of strategic consulting at LexisNexis CounselLink, notes that these higher rates make the biggest Biglaw firms even more profitable, but there is an opportunity for the firms below:
“(The largest firms) really have a hold on those markets,” said Kris Satkunas, director of strategic consulting at LexisNexis CounselLink and the report’s author. “It’s almost a chicken-and-the-egg thing: the larger the firm, the higher its rate. But a higher rate drives up the firms’ average income, meaning the firm can grow even larger.”
“I don’t think people realize how strong the correlation is between the size of the firm and the rates,” Satkunas said. Firms slightly smaller than the “largest firms” category, ones with head counts of 501-750 lawyers, have an opportunity, she added, as clients look for high-quality legal work at a lower cost.
But the report also found that alternative fee arrangements are gaining traction — as Satkunas said, “I’m hopeful that we’re finally moving away from talking about alternative fee arrangements and starting to embrace them.” Last year, 12.1 percent of matters were under alternative fee arrangements and as the economic pressure of COVID-19 continues, that number is bound to continue to go up.
Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).