Study Raises More Questions about Big Law Billing Practices

A new analysis of more than $4 billion in law firm billings has provided more ammunition for corporate counsel seeking to contain legal costs.

More than three out of every four law firms bill different hourly rates to different clients for similar work, the study reports.

And “rack rates”  in some cases quintupled actual rates billed by law firm partners to major corporate customers, the study shows.

Soaring corporate legal expenses — particularly in discovery — has been a recurring and painful theme at major conferences this year examining various aspects of the civil justice system, from the Georgetown Law meeting on the future of the practice of law, to Pepperdine Law School’s conference on the “crisis” in American justice, to the recent Duke Law School-hosted symposium that drew almost 200, including many federal judges.

The squeeze on middle class consumers of legal services –  many of whom enjoy too much income to qualify for government assistance, but too little to be able to afford lawyers’ fees — has been labeled a crisis in the delivery of legal services and access to American justice .

he  authors said the study conclusions are based on an analysis of 18.9 million invoices from 2007 to 2009.   The CT TyMetrix study assembled data from more than 4,000 law firms, 50,000 individual billers.  The firm provides legal performance management solutions, and will sell the the final version of the study when it is completed.

“The groundbreaking analysis will arm general counsel with new ways to reduce their law firm spending, negotiate fees and improve settlement strategies,” said Steven Williams of The Corporate Executive Board, a firm that joined in the study.

The idea was to survey actual rates charged by law firms.  The figures reported are from initial findings, with the full study scheduled for release in September.

The largest rate differences in charges by a single person were from $350 to $1,000 an hour.

The survey found that the media partner rate was $340 per hour in 2009 for major corporate clients,  compared to typical “rack” rates reported in other surveys of $1,590.

Authors concluded the statistics show lots of variation which suggest room to maneuver and negotiate for corporate clients.

The final report will draw on data captured from ebilling and matter management systems.  The authors say it will outline in detail how actual rates charged by law firms to major corporate clients vary by geography, work and matter type, matter phase, timekeeper roles, including paralegal, associate and partner timekeeper practice areas and experience levels.”

The final report promises conclusions on varying rates by tyupe, length and cost of specific types of representation, “timelines from service to billing and strategies to save by using regional or smaller law firms.”

The interim study will not be made available for public viewing.