New data from Wolters Kluwer’s LegalVIEW Insights suggests that early 2024 law firm rates in the US charted a ‘volatile and inconsistent trajectory’, with rates paid across some sectors increasing significantly, but dropping in others, such as financial services.
Data captured through April 2024 found that ‘clients in the manufacturing and life sciences industries experienced average rate increases of 9.7% and 9.9% respectively. Meanwhile the financial and insurance sectors saw average rate decreases between 4.9% and 4.6%’.
That’s a surprise to this site, as one would perhaps expect financial services to see constant increases in hourly rates and overall fees, rather than a drop. However, decreases hit almost 5%.
Why this is happening is unclear. It would be tempting to say it’s because of the impact of major investments in legal tech by large banks and insurance companies, thereby reducing the need for so much external support – but equally it could be because of many other factors: increased competition for this work; a short-term drop in deal activity; or previously very large rate increases that are now being moderated. Right now, we don’t know. And much as it would be very interesting if legal tech had played a part here, there is no direct indication it has. We’ll have to wait for more evidence.
The LegalVIEW Insights series leverages more than $180 billion in legal invoice data housed in Wolters Kluwer’s LegalVIEW database, so it’s a fairly solid survey of what’s happening in terms of numerical shifts.
Jennifer McIver, Director of Legal Operations and Industry Insights at Wolters Kluwer ELM Solutions, commented: ‘Successfully absorbing the cost of ongoing law firm rate increases remains a challenge for corporate legal departments. However, we continue to see evidence that early firm engagement, sophisticated RFP processes, and staunch enforcement of billing guidelines can mitigate spend.’
It will be interesting to see how these trends develop.