Attorneys are infamously expensive, but it’s often hard to know how much hiring a lawyer will cost. To shed some light on the field, two companies that provide attorney practice management tools have begun analyzing attorney rates and publishing their findings.
Using anonymized data for thousands of its clients, legal technology company Clio issues an annual legal trends report, stating average billable rates for firms of every size and practice, says Clio’s lawyer in residence Joshua Lenon.
While Clio analyzes what law firms are charging, Brightflag, which specializes in services for in-house attorneys, recently analyzed the billions of dollars its clients (again, anonymized) have been paying the nation’s largest firms, says Sarah Scales, Brightflag’s head of product marketing and a co-author of the report.
Both reports contained findings that can help any client become a better consumer of law.
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What Goes Into a Client’s Bill
A firm’s senior attorneys charge the highest hourly rate. To reduce a client’s costs, these attorneys often act in a strategic and supervisory role, while junior attorneys (with lower rates) draft contracts, research legal issues, analyze documents and more. However, clients should be monitoring bills to ensure that partners are only doing the work that’s necessary and are directing tasks to junior attorneys when appropriate, Scales says.
Just as a bill includes the cost of partners and associates, it will also include rates for non-attorneys, such as paralegals, investigators and support staff. While attorney rates tend to increase at or slightly above the rate of inflation, support staff rates have been essentially flat for eight years, Lenon says.
Attorney bills also include the matter’s related costs — everything from filing fees and courtroom transcripts to charges for photocopies.
How Attorneys Set Hourly Rates
The majority of attorneys charge by the hour. Attorneys charged a national average of $327 an hour in August 2023, while non-lawyers charged $178 an hour, according to Clio’s 2023 report.
However, individual attorneys’ billable rates are typically determined by:
— The size of their firm.
— The number of years they’ve practiced law.
— The types of cases they handle.
— The firm’s geographic location.
The type of practice is a significant factor in cost. For example, on average, attorneys representing juvenile clients charge $127 an hour, while tax, intellectual property and bankruptcy lawyers have billable rates in excess of $400 an hour, according to Clio’s report.
Attorneys’ fees may be determined by law in certain practices. For example, there are often statutory-based fees for attorneys representing an estate during probate, based on the estate’s total value.
[Understanding Law Firm Hierarchies]
Hiring a ‘Big Law’ Firm Means Paying Big Money
According to Brightflag’s analysis of the hourly rates, partners at the nation’s 24 largest law firms charge, on average, $1,400 an hour, while a senior associate’s hourly rate is $900. For firms ranked 26 through 50, partners have an average hourly rate of $1,200.
At firms ranked 51 to 100, the average partner rate is $750 an hour, while a senior associate’s hourly rate is $600.
There’s one notable exception to the drop in fees based on firm size: At firms from No. 1 to No. 75, attorneys in mergers and acquisitions charge roughly the same, Scales says.
Geography Makes a Huge Difference
In West Virginia, the average rate for an attorney is $162 an hour, while attorneys in the District of Columbia average $392 an hour, according to Clio’s report.
Therefore, if a client can move their work to a different locale, it can mean a significant reduction in cost. At the nation’s largest firms, the partner rates in New York City average $1,560 an hour, while the average hourly rate for partners in a Kansas office is $764, Scales says.
Retainers vs. Advanced Billing
When paying a retainer, a client gives an attorney money prior to the attorney’s rendering any services. The attorney then holds the money in a trust account, deducting fees as they work on the client’s case. If they part ways, the attorney must refund any remaining money, Lenon says.
By contrast, in an advanced billing arrangement, a client pays before the attorney does any work, and the attorney keeps the entire amount.
Contingency Fees
In a contingency fee matter, a plaintiff pays no attorney fees during the case. Instead, the attorney will take a percentage of the proceeds — often as much as 30%. On the other hand, if the plaintiff doesn’t receive any money, they don’t pay attorney fees. Contingency fees are often available in cases such as personal injury, workers’ compensation and appeals of denial for veteran or Social Security benefits, Lenon says.
Clients need to make sure to understand the specifics of a contingency agreement. Some attorneys require plaintiffs to pay all costs and fees relating to the litigation, either during the lawsuit or by deducting the total from the plaintiff’s recovery.
Flat Rate/Unbundled Legal Services
Under a flat-rate arrangement, an attorney provides a specific service for a defined fee. A criminal defense lawyer might charge a flat fee for defending a client during arraignment and plea bargaining. However, the defense attorney will not represent the client during trial without a separate fee agreement.
In an unbundled legal service arrangement, clients can negotiate with an attorney in advance for the services they want. For example, a divorce lawyer may provide a client with a menu-like list where suing over the house will cost $1,000 while fighting over the dog will cost $500, Lenon says.
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Don’t Be Afraid to Ask How Much It Will Cost
In-house counsel benefits from setting a budget for each matter, and talking about the price at the outset creates a culture of cost-consciousness, Scales says.
Individuals should not be shy about asking about fees and costs either, Lenon says.
Clients should even ask if they think they are receiving free services. For example, in some jurisdictions, criminal defendants must pay for public defenders if they lose in court — which includes accepting a plea of guilty, he says.
Don’t Be Afraid to Ask About Payment Plans
Clients should not be afraid to ask if an attorney will agree to a payment plan.
On average, clients with a payment plan pay their lawyers just $300 a month, Lenon says.
Therefore, depending on the matter, a client with a payment plan might choose a better lawyer or negotiate a different form of representation than if they chose only based on what fees could afford as a lump-sum payoff in full.
At least a payment plan can relieve the immediate burden of an attorney’s fees, Lenon says.
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