As Law Firm Rates Rise, Corporate Legal Teams Must Maintain Value For Cost
CEB and TyMetrix Legal Analytics' 2012 Real Rate Report™ Gives General Counsel New Insights that Lead to Greater Negotiating Power, Offer Cost-Saving Alternatives
ARLINGTON, Va., June 28, 2012 /PRNewswire/ -- As top partner rates rise to more than $1,000 per hour, in-house counsel may find themselves hard pressed to control their outside counsel spending, according to the 2012 Real Rate Report, an analysis of more than $7.6 billion in law firm billings. The report was published by Corporate Executive Board (CEB) (NYSE: EXBD), a leading research and advisory services company, and TyMetrix Legal Analytics, part of Wolters Kluwer Corporate Legal Services. Insights in this report give general counsel a new resource to negotiate rates with law firms, help them understand what they're paying for and how to make smart trade-offs through options such as alternative service providers, smaller markets or smaller firms.
"Despite the recent recession, rates at top law firms continue to grow, often much faster than legal budgets at corporations," said Brian Lee, managing director, CEB. "However, the Real Rate Report shows that cost control doesn't have to be a losing battle. By using the information in this report general counsel can find out if they are paying the right rate for their legal services or if there is better value elsewhere. CEB research indicates that by simply looking at smaller markets or smaller firms, general counsel can often find high-quality advice at a much more reasonable cost than they could imagine. Essentially, they won't be paying for premier law firm office space in the most expensive cities in the country."
The Real Rate Report also reveals that while many general counsel assume that more work or longevity with a single law firm will earn them a discount, the opposite is true. While companies often reap cost savings when initially concentrating work with a few law firms or reducing the number of law firms they work with, as time passes they often pay higher rates to the law firms they work with most or have used the longest. In order to minimize what general counsel may view as the "creeping up" of law firm rates over time, companies must continue to foster competition between firms and alternative service providers and ensure rates are being examined on a regular basis.
"Based together, both law firm and legal departments need information to help identify a balanced solution," said Craig Raeburn, general managing director, TyMetrix Legal Analytics. "For law firms analytical insights provide a clear understanding of their competitive advantage and offer valuable insights into what law departments are willing to pay, before negotiating."
Driving Toward Cost Control
General counsel can use the Real Rate Report to lower their outside counsel costs by taking the following actions:
- Negotiate Better Rates – Negotiate rates with law firms using the actual rates other firms are paying, not published rack rates (which are almost always higher)
- Better Allocate Work to Law Firms or Alternative Providers – Decide when to send matters to smaller firms, smaller markets or alternative service providers to be handled for a lower cost
- Create Effective Alternative Fees – Build models for alternative fee structures based on historical costs and models for similar work
- Enhance Budget Oversight – Set triggers to signal when spending gets out of control to avoid costly surprises
- Manage Staffing – Set staffing expectations by matter and matter type using the report as a reference on how other matters are staffed
The 2012 Real Rate Report includes analysis of more than $7.6 billion in law firm billings generated from 2007 through 2011 by more than 4,000 law firms, and roughly 120,000 billers – including approximately 80,000 partners and associates. The information used for the Real Rate Report is pulled from the TyMetrix Legal Analytics LegalVIEW™ data warehouse, which contains more than $24 billion in legal spend data aggregated from e-billing and time management solutions of TyMetrix clients and non-clients alike. Report analysis was conducted by CEB.
A complimentary copy of the report is available to members of CEB General Counsel Roundtable and CEB Corporate Legal Exchange. For further advice on managing spend on outside counsel please visit www.executiveboard.com/real-rate-report or call 1-866-913-8103. To order the 2012 Real Rate Report, please visit http://wvw.tymetrix.com.
About Corporate Executive Board
By identifying and building on the proven best practices of the world's best companies, CEB helps senior executives and their teams drive corporate performance. CEB offers comprehensive data analysis, research and advisory services that align to executive leadership roles and key recurring decisions. CEB tools, insights, and analysis empower member companies to focus efforts, move quickly, and address emerging and enduring business challenges with confidence. CEB's client and member network includes 85 percent of the Fortune 500, 50 percent of the Dow Jones Asian Titans, and 70 percent of the FTSE 100. It spans more than 50 countries, 5,700 individual organizations, and 240,000 business professionals. For more information, visit http://www.executiveboard.com.
TyMetrix is the global market leader in delivering intelligent solutions that empower corporate legal departments, law firms and claims organizations to manage the business of law. It provides clients with quality legal management software, services and solutions, including e-billing, matter management and performance metrics, and the expertise required to manage risk, reduce costs and gain the insight required to meet their strategic objectives.
TyMetrix Legal Analytics, a complementary business to TyMetrix's core software offerings, combines unparalleled analytical and legal domain expertise with LegalVIEW™ -- the world's largest permission based contributory data warehouse of legal performance data -- to provide predictive and analytical models, benchmarking and insights to legal departments and all professionals involved in managing the business of law. For more information, please visit www.tymetrix.com.
TyMetrix is part of Wolters Kluwer Corporate Legal Services, a business of Wolters Kluwer, a market-leading global information services company. Visit www.wolterskluwer.com.
SOURCE Corporate Executive Board