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Law firm rate increases and the link to productivity increases

When law departments know that their companies have very little ability to raise prices, it galls their in-house lawyers to watch outside counsel raise their billing rates, where it seems to those in-house that the rate raises are almost as a matter of expectation – one more year, another six percent – and an entitlement.

How can a law firm prove that the lawyer whose rate has jumped six percent can accomplish as much in six percent less time or with six percent better quality? A portion of the bump up can be attributed to higher costs, but companies selling to powerful buyers cannot automatically pass on higher costs.

In the same way that more time in grade, on its own, should not justify a raise or promotion in a law department, law firms ought to figure out ways to show that their raises – fee increases – result from an increased ability to bring value to clients.