Raintoday.com has published a report analyzing law firm billing practices. The 2008 Report titled Fees and Pricing Benchmark Report: Law Firms & Legal Services Industry 2008, outlines the key elements for growing your law firm. It provides keen insight into what the most successful law firms are doing with regard to hourly billing rates, alternative billing methods and other related billing practices.
Here are a few key insights from the report that may be of interest to your firm:
- Discounting is common practice. 76% of all firms discount their fees versus published rates or rates they might have mentioned in an initial client conversation - with the average discount amounting to 9.9%.
- Larger firms are more likely to discount. Nearly all (89%) firms with 10 or more professionals on staff discount, versus only 59% of smaller firms.
- Service guarantees are widely used. Guarantees are offered by almost half (47%) of responding firms. The most popular guarantees allow clients to reduce their payment based on dissatisfaction with the value received.
- Standard rates vs. the actual rates differ for top-level professionals. For those firms that use a standard set of hourly billable rates for their professionals - either published or for internal use only - the median average realized hourly rate for highest-level professionals is 6% less than the standard or published rate ($400 vs. $375), and for upper-level professionals the median actual rate is 9% less. For all other levels of professionals, there is no difference between the standard and realized rate.
- Higher profit. More than one-third (36%) of brand leaders earned a profit of 30% or greater, compared to just 15% of lesser-known firms.
The media page for the report is found here.