Wolters Kluwer’s LegalVIEW Insights Report finds that law firm rate increases continue to vary widely across industries

Global News

15
Feb
2023

Editor

A new report from Wolters Kluwer ELM Solutions shows that law firm rate increases continue to vary widely from sector to sector, with financial companies still paying the highest rates of any industry, followed by technology and consumer services.

The study marks the latest in ELM Solutions’ ongoing LegalVIEW Insight Report series and suggests that corporate legal departments actually hold substantial pricing negotiation power over even the largest or most prestigious of firms in the face of rising rates. 

Leveraging the more than $155 billion in legal invoice data used in ELM Solutions’ LegalVIEW database, the LegalVIEW Insights 2023-1 report published this month revealed that approximately 32% of the timekeepers comprising the powerhouse law firms that form the Am Law 100 received no rate increases at all during the period July 2021 to June 2022. Furthermore, approximately 13% of all timekeepers saw the average rate they charge across all clients decrease, a shift that most likely can be attributed to a timekeeper losing a high-paying client or onboarding a new client at a lower rate. 

Corporate legal departments have long regarded the regular substantial rate increases of some of the largest and most prestigious law firms in the United States as an inevitability beyond the reach of negotiations – but that may not be the case. While rate increases in excess of 10% were achieved by approximately 21% of law firm timekeepers, 40% of all law firm timekeepers received no increases at all. 

“Timekeepers working at some of the industry’s largest firms are willing to work for less than what many of their clients have already resigned themselves to paying,” said Nathan Cemenska, Director of Legal Operations and Industry Insights at Wolters Kluwer ELM Solutions. “The pricing power wielded by some of America’s largest firms is not immovable, and can be successfully challenged by corporate legal departments willing to adopt a comprehensive approach to better understanding their legal spend and rate management practices.”

Additional highlights from the LegalVIEW Insights 2023-1 report include:

• Timekeepers billing into financial corporate legal departments secured a mean rate increase of 5.9%, which is well over the 2.8% they achieved last year. This could be due to a “rubber band effect” – where increases were kept fairly low in 2021 and had to be compensated for in 2022. 
• Consumer services – a category that includes storefront retail – experienced only a 0.3% mean rate increase in 2021 as they struggled against the impact of lockdowns and slow business. This pales in comparison to the steep mean rate increase of 8.6% seen in 2022, the largest of any industry. 
• The average rate increase experienced by associates was 62% higher than the rate increase seen by partners, which could reflect in part firms optimizing associate hours and rates in an effort to boost profit margins. 

ELM Solutions, part of Wolters Kluwer GRC, is the market-leading global provider of enterprise legal spend and matter management, contract lifecycle management and legal analytics solutions. The company provides a comprehensive suite of tools that address the growing needs of corporate legal operations departments to increase operational efficiency and reduce costs. Corporate legal and insurance claims departments trust its innovative technology and end-to-end customer experience to drive world-class business outcomes. 

Wolters Kluwer ELM Solutions was named a leader in both the IDC MarketScape: Worldwide Enterprise Legal Spend Management 2020 Vendor Assessment and IDC MarketScape: Worldwide Enterprise Matter Management 2020 Vendor Assessment. The company’s award-winning products include Passport®, one of the highest rated ELM solutions in the latest Hyperion MarketView™ Legal Market Intelligence Report and TyMetrix® 360°, the industry’s leading SaaS-based e-billing and matter management solution. CLM Matrix, meanwhile, was named a “strong performer” in The Forrester Wave™: Contract Lifecycle Management For All Contracts, Q1 2021 report. ELM Solutions’ LegalVIEW® portfolio of legal analytics solutions is based upon the industry’s largest and most comprehensive legal spend database, with more than $155 billion in invoices.