Distinguish between rate increases, fee increases, and outside counsel spend increases

Hourly rates increase year after year at most law firms. That does not necessarily mean that the amount the firm charges to do the same tasks increases at the same level. The firm might use lower-cost associates, write off time, use technology better, or have more skilled lawyers on the matter who take less time. For any of these reasons, rate increases may not translate into corresponding fee increases. (My definition of fees is the amount billed by the law firm.)

Similarly, the total outside counsel spending paid by a law department may increase in line with overall rate increases and may increase in line with matter fee increases, but not necessarily. Extraordinary legal events and the vagaries of timing cause fluctuations in outside counsel spending that are unpredictable and not causally related to either rate increases or fee increases.

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