Some research done for a consulting client disclosed a clear trend for average partner rates to rise as the size of law firms increases. Specifically, as firm size increases by 100 lawyers, the average partner rate per hour increases by $13.
Let’s apply this correlation. Assume the average partner billing rate of a 400-lawyer firm is $500. An 800-lawyer firm’s average partner rate, since the firm is 400 lawyers larger, would be predicted by the model to add four times $13 to the first firm’s rate: $552 an hour (See my post of Oct. 23, 2005 on greater overhead in larger firms.).
Law departments can do this calculation for their own set of law firms (See my post of July 23, 2007 on the downside of convergence.). The results may push you to rethink your mix of law firms.