Meddling in law firm management: push law firms to use lawyers in lower-cost (rate) cities

Some law firms with multiple offices may set lower billing rates for lawyers in lower cost cities, especially if they pay lawyers in those cities less than they pay lawyers of the same level elsewhere. If so, a law department could arbitrage the rate differences and push the law firm to have as much work as possible done in the cheaper cities. The idea is akin to using lower-cost offshore personnel (See my posts in 2005 about offshoring of June 15 and May 20; sharing the savings with law departments (June 15), comparative costs (Sept. 27) and Jan. 27, 2006 about Mauritius.).

If there are rate differentials for equivalent lawyers within a firm, it could give larger firms a competitive advantage. It also conflicts the partners of a firm, who probably prefer to work with colleagues in the same office and who seek to maximize the revenue for which they receive credit.

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