Discounts Are Prevalent and Nonhourly Arrangements Becoming More Common (But Maybe Not So Profitable).
Legal consultants Altman Weil have come out with their “2014 Law Firms in Transition Survey” based on receiving survey responses from 304 U.S. law firms, including 42% of the nation’s 350 largest firms (a 38% response rate out of 803 firms which were polled).
Here are the key “takeaways” from this survey:
1. Overall billing rates rose 4%, but firm leaders reported that, on average, their firms provided discounts on 21-30% of all hourly rates.
2. Nearly half of all firms with 250 or more lawyers reported changing their strategic approach to pricing, while only 22% of firms with 50 to 249 lawyers were doing so. In the area of efficient legal service delivery, 54% of the large firm group was pursuing change, compared to 34% of the smaller firms. On lawyer staffing strategy, 59% of larger firms reported making significant changes as opposed to 41% of the smaller firms.
3. 92% of the responding firms was using non-hourly billing arrangements, with half reporting an increase in fees generated from these arrangements as a percentage of total revenue for 2013. However, only 16% of the firms using these alternative arrangements have been able to make them more profitable than hourly billings.