Differential between partner and associate rates with increases in firm size

Data I reviewed recently from a number of law firms disclosed that for every additional 100 lawyers in a firm, the average associate hourly billing rate rose $7.00. For every additional 100 lawyers in a firm, the average partner billing rate rose $13.00. That is, as law firms grow larger the average partner rate grows almost twice as fast as the average associate rate. There was more variability in the sample among partner rates — almost twice as much — as among associate rates.

What law departments should take from these findings is that (1) the larger the firm the higher the billing rates and (2) divergence shows up much more in the rates of partners (See my post of July 30, 2005 about data on US partner and associate rates.). Bear in mind, however, that stated billing rates are often not the same as effective billing rates.