Wolters Kluwer Real Rate Report Shows Law Firm Rates Rising at the Fastest Pace Since the 2008 Recession
Wolters Kluwer’s ELM Solutions has released its 2016 Real Rate Report. The report contains new information that the firm says “underscores recent trends in legal rates, confirming that overall rates continue to rise, with average year-over-year lawyer rate increases reaching their highest levels since 2008.”
The Real Rate Report, released jointly with CEB, analyzes actual invoice data to provide benchmarks of law firm rates and uncover the drivers of the billable hour. Key findings from the report include that the fact that larger firms maintain pricing power as rates rise. Among over 350 factors tested, law firm size is the single largest driver of law firm rates.
Interestingly, rates at the associate level are rising faster than at the partner level, Wolters Kluwer says. The average year-over-year rate increase for associates was 7.3%, more than double the 3.6% rate increase for partners.
First-year associate rates, however, are flat. Despite the rise in overall associate rates, the average rate that a first-year associate billed has not changed. As a result, rate increases among more tenured associates are even higher than for associates overall.
“The Real Rate Report is a prime example of how data and benchmarking help both corporate legal departments and law firms gain insight into the factors that drive legal spend and value,” says Barry Ader, vice president, Product Management and Marketing, for Wolters Kluwer’s ELM Solutions. “Corporate legal and insurance claims departments use this crucial information to gauge the value of outside counsel, benchmark performance, and more effectively negotiate rates. Law firms benefit by leveraging the report to understand market competition and demonstrate their relative value during negotiations.”
The annual Real Rate Report is powered by LegalVIEW®, “the world’s largest source of international legal performance information”, containing more than $82 billion in legal invoice data. The data in LegalVIEW is sourced from actual legal invoices, not surveys, leading Wolters Kluwer to claim “it provides the most accurate, reliable, and granular data for analysis and insights.” Capturing all invoice data, down to individual billers and tasks, enables identification of legal rate trends as well as the specific factors that drive them, the company adds.
Earlier this month Wolters Kluwer’s ELM Solutions releases its General Counsel Barometer, revealing GCs at European-based companies are looking to align with business strategy and increase legal department technological capabilities. The survey revealed there is a significant innovation gap between small and larger companies.
38% of respondents stated that their role has become increasingly strategic in the last three years, but differences between a countries’ strategic focus was apparent. 47% of U.K. respondents feel their focus has been increasingly strategic, with this figure falling to 44% among Germany-based organizations and 39% among those headquartered in France. Alignment with business strategy will provide a major focus for legal departments. 54% say that in the next three years their role will develop with an ever increasing focus on strategy.
Ranked one of the world’s largest legal service organizations with more than 180 years of legal expertise, Wolters Kluwer’s ELM Solutions says it “leverages a deep understanding of customer needs to transform the Enterprise Legal Management experience and help corporate legal departments and insurance claims organizations make better business decisions.”