Legal Departments Can Minimize

Legal Departments Can Minimize Rate Increases, Study Finds: Outsourcing Trends

Apparently, there’s room to negotiate, even with the biggest law firms, as this study shows that legal departments can minimize rate increases!

That’s the headline finding from the latest Wolters Kluwer ELM Solutions’ LegalVIEW Insights Report, released yesterday. It suggests that in-house legal teams actually hold substantial pricing negotiation power with large and small law firms alike, with even seemingly monolithic firms demonstrating some room for negotiation.

The report 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.

“What this suggests is that 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 latest LegalVIEW Insights report include:

  • Rate increases in excess of 10% were achieved by approximately 21% of law firm timekeepers. However, 40% of law firm timekeepers received no increases at all.
  • 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.
  • Rate increases vary widely among business sectors, with financial companies continuing to pay the highest rates of any industry. Law firm timekeepers billing into financial companies in 2022 secured an average rate increase of 5.9% – well over the 2.8% increase they obtained in 2021.

You can get the FREE full report here. Legal departments can minimize rate increases – if they negotiate. It never hurts to ask! 😉

So, what do you think? Are you surprised that the study shows that legal departments can minimize rate increases? Please share any comments you might have or if you’d like to know more about a particular topic.


Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by my employer, my partners or my clients. eDiscovery Today is made available solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

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