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Percentages of bills at rack hourly rates compared to discounted hourly rates

A small finding from PLCLaw Dept. Quart., Vol. 3, Jan.-March 2007 at 27, got me thinking about full hourly rates compared to discounted hourly rates and the distribution of fees paid by law departments between those two categories. The report acknowledges the continued popularity of billing based on time, and then continues: “with standard hourly rates accounting for 20% of overall outsourced work, and discounted hourly rates accounting for 50%.”

The chart that accompanies this text shows that the hegemony of hourly rates continues. For law departments in four size bands, the percentage of bills that they pay based on standard hourly rates plus discounted hourly rates ranges between 80 and 100 percent.

The larger the department, the more likely it is to pay discounted rates, which partly explains why total legal spending as a percentage of revenue declines with revenue growth.