Supply, Demand, Price, And Profit.
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Thomson Reuters, in an October 2016 Peer Monitor Special Report entitled “Does Slower Rate Growth Increase Revenues?,” suggests that firms adopting smaller hourly rate increases have experienced better demand and revenue growth than firms pushing higher hourly rate growth alone in order to achieve higher revenues.
For example, midsize firms trimming their rate increases over the past three years—from 2.5% in the first six months of 2014 to only 2.1% in the same period in 2016—saw an average increase in demand (work obtained), namely, demand grew 1.6% in 2016 from the trimming of rates. AmLaw Second Hundred firms saw demand decline when hourly rate growth climbed steadily. Finally, AmLaw 100 seemed to follow the trend of the AmLaw Second Hundred firms. Although there is no one-size-fits all strategy, this trend may be worth studying by law firm management groups.