Every few years, law firms announce incremental raises for their associates, usually around 5 percent, which incites a collective uproar from clients. Clients foresee these cost increases being passed along to them and bitterly resign to the eventual obligation to foot the bill. Although these raises are often lower than inflation, considering the time period between such hikes, it doesn’t pacify the complaints.
Strangely, there is rarely a squabble about partners raising their rates. This could be attributed to clients valuing partners’ work more or not being able to directly confront their business relationships and threaten to reduce their compensation. Either way, partners have evidently been costing clients approximately 3 percent more each year.
However, an exception to this trend was witnessed last year when partners increased their billing rate by an exceptional 5.4 percent on average, an increase from 2022’s 4.5 percent rate hike. This data is based on the 2024 CounselLink Trends Report from LexisNexis CounselLink.
The last two years have brought more inflation than usual, particularly in housing and car insurance, with a dash of market manipulation contributing to the mix. Even in this context, the partner rate hike seems egregiously out of sync with the long-standing trend.
Biglaw firms primarily drive these increases, with the largest firms significantly outpacing their smaller peers. Among the markets with top median partner rates, Boston reported a surprisingly high rate hike for a single year.
A wide array of observations in the report are worth exploring for legal professionals, providing a clearer understanding of how to value their practice. For clients, this report might stir up some angst while signing those hefty checks.
Originally written by Joe Patrice, a senior editor at ‘Above the Law’