Biglaw didn’t have a great 2022. Demand was down — particularly in some corporate practices. Layoffs are happening. And profits are expected to be down. With the economic uncertainty looming in the background of all this, the question many legal industry watchers have is, “How will Biglaw respond?”
At the end of last year, Wells Fargo Legal Specialty Group predicted the industry would respond with 7-8% rate hikes for 2023; after all, the billable hour remains the number one way firms make their money. But based on new data collected by Bloomberg Law, those increases look like they’re going to be even bigger.
By taking a look at bankruptcy court filings, Roy Strom is tracking the rate increases of 2023:
The firms don’t readily advertise their billing rates. But bankruptcy courts provide a source of transparency. Firms are required to disclose how much they bill, and they notify courts—and bankruptcy watchdogs at the U.S. Trustees’ offices—when they plan to raise rates.
This year, at least 11 law firms have notified courts they are charging more for their services.
Of those increasing billing rates, the average increase for partner rate is a 9.7% increase — higher than the predicted bump. However, the mode of rate increases — 6 of the 11 — increased partner rate between 7% and 8% as expected. Associate rate increases spanned a greater range, from a 0% increase to 19.6%, with the average settling at a 9% bump.
Of course, no matter how illuminating this data is, it’s from only 11 firms. But clients should definitely be aware — your legal bill is probably going up.
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Mastodon @Kathryn1@mastodon.social.