The bull market in high-end work makes hourly rates defy gravity.
The dramatic increase in clients’ need for complex and bet-the-company work is bad for clients but downright awesome for law firm rates. The highest rate in the market now commands 2.9 times the average rate clients pay. Clients* give BTI 6 reasons they pay law firms top rates:
- Attorneys bringing deep understanding of the business risk
- Penetrating command of the solution or path to a solution
- Unmatched commitment to help
- Clearly grasping the magnitude of the enterprise level risk at hand
- Easily anticipating the needs and obstacles from the start
- Eagerness to discuss strategies and actions before being hired
These 6 insights translate into a top hourly rate of $2,000 an hour in 2015, up from $1,600 last year—a 25% one-year increase. Global GCs pay these rates for:
- Bet-the-company IP work
- Enterprise level M&A related litigation
- Large-scale government investigation
- Defense against high-profile activist hedge funds
59% of corporate counsel at large companies now pay at least one law firm $1,000 per hour as their top hourly rate paid—compared to only 39% last year. Again, top legal decision makers credit the increase in the most complex legal work.
The average of the entire spectrum of highest rates paid across all large companies is $982 per hour—up from $909 in 2013, after all discounts. We estimate the highest rate paid by middle market clients—between $50 million and $750 million in revenue—is $862 per hour, primarily for M&A related work.
The top legal decision makers tell BTI how these law firms meet the 6 key criteria above. In virtually every instance where clients are paying top of the market rates—the decision maker knew exactly which law firm they would hire if an ultra-high risk matter came up. These clients had deep experience with these firms and knew what they could deliver.
Law firms position themselves for the high-end work by talking business implications, sharing strategies, and maintaining an active ongoing dialogue with their clients—well before a high-end problem ever rears its ugly head.
MBR
*Based on BTI research conducted between March 2015 and September 2015. BTI conducted more than 300 independent, individual interviews with CLOs and General Counsel at Fortune 1000 companies and large organizations.