Big differences possible in effective billing rates of outside counsel, by type of matter

If a general counsel normalizes the hourly rates charged be various law firms – an effective-billing rate calculation – it is almost always calculated at the firm level. Take a pile of firm’s bills and divide their total by lawyer hours. A variation, and one that can produce significantly different effective rates, does the same calculation but within types of matters. Look at IP-related bills, or M&A bills, or the employment-related bills. Variations by the firm in staffing and managing matters in different substantive areas can create widely different numbers. By the way, your fully-loaded internal cost probably differs as dramatically by practice area.

For background on effective billing rates, my first metapost is available (See my post of March 9, 2009: effective billing rates with 9 references.).

Since then several other posts pertain to effective rates (See my post of May 22, 2009: total hours of legal work per unit of revenue; Sept. 1, 2009: effective billing rates adjusted for cost of living; Oct. 11, 2009: some differences in costs between firms and departments; Nov. 25, 2009: adjust discounts by effective billing rates; April 21, 2011: cautions when departments compare internal to external billing rates; and May 29, 2011: effective rates and trimmed means.).

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