It will come as no surprise to anyone buying services from law firms across the world, that partner and associate hourly rates vary greatly between firms and countries.
Hourly rates for partners
In terms of average hourly rates paid for partners, the global average in 2011 was US$635* (on a base of 909).
UK clients pay the highest rates on average at US$727 while Chinese clients pay the lowest rates on average at US$571. This represents just over a 10% swing either way.
The pattern tends to be the more mature the legal market, the higher the rates. All rates are analysed using the US dollar, so exchange rate fluctuations can radically change the picture. The variations by firm type are much larger, with swings from 20% below to 40% above the average global rate.
Premiums for top level work
We asked clients about their top level work and the premium they’re prepared to pay. Again, there were dramatic variations, with the markets paying the highest rates also prepared to pay the highest premium.
The average premium for top level work was 15%, varying from 28% in the UK to 5% in Asia. Financial institutions were also willing to pay a higher premium, at 22% rather than 13% for corporations. This gap was not evident for normal rates. The justifications for paying a premium varied too, some paying for very specialist expertise, others looking for 24/7 attention.
Alternative fee structures
Uptake of alternative pricing models varies even more across the world. China is really leading the world in this respect, with the vast majority of work being completed on a fixed fee, often for the whole year's non-contentious work. This is considered custom in China.
In the US, the opposite picture is evident, with the vast majority of work being done on the hourly rate. Why is the US still so tied to the hourly rate? Perhaps it is linked to the notoriously high levels of litigation spend. Whatever the reasons, this is certainly an area where the West can learn from the East.
*Data extracted from Acritas’ Sharplegal – the world’s most comprehensive annual study of the global legal market