Law firms showed healthy increases in billing rates this year, with the vast majority of those responding to The National Law Journal’s annual survey boosting both associate and partner fees. Firms that are focused in the Northeast consistently racked up the highest increases, though hikes occurred in all regions. The figures might have edged even higher, but, as one consultant says, “Lawyers tend to be terrified of losing clients because of increased rates.”
This year, 125 law firms responded to questions about billing rates, which were part of the NLJ’s survey sent to about 300 firms to determine the NLJ 250, the annual list of the nation’s 250 largest law firms. Of those 125 firms responding to the survey’s questions about billing, 110 also supplied answers to those questions in the 2003 survey.
The upshot of the results is that billing rates continued to climb this year, with some firms demonstrating notable upswings as perhaps a vote of confidence in the 2004 economy.
At the high end of partners’ billing rates, meaning the most expensive rate a firm charges for its most accomplished partners, 88 of the 110 firms responding for the last two consecutive years raised their fees. At the high end of associates’ billing rates, meaning the most a law firm charges for associate work, 81 of the 110 firms increased those fees.
Reed Smith reported the highest partner rate, at $875 per hour. It increased its high-end rate by $170 per hour, a major jump compared with other firms.
But that increase, according to a firm spokesperson, was an anomaly created by one partner in the firm’s London office. The rate, when converted to American dollars, created the high number, the spokesperson said. The average rate for all Reed Smith attorneys billing was $302 per hour in 2004.
In a comparison of large firms in regions across the country, those firms based in the Northeast or with their largest offices there consistently showed the highest increases.
For example, New York-based Brown Raysman Millstein Felder & Steiner raised its high-end partner rate by $75 to $600 per hour. Richard Raysman, managing partner of the firm’s New York office, said that his firm had resisted increasing billing rates for the last three years. A stronger stock market, to which the firm’s real estate practice is closely tied, and rising expenses prompted the increase, he said.
“If Wall Street does well, they have deals for us to do,” said Raysman, adding that a more robust technology sector also spurred the hike.