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Quality of similar-size firms varies less than their cost

A law department can hire two five-hundred lawyer firms for similar services, paying one an effective rate of $450 an hour and paying the other an effective rate of $300 an hour. The difference between the two firms’ costs on a per-hour basis is 50 percent.

But I doubt that the quality of the work or the results produced vary by anything like 50 percent. If quality varied that much and was perceptible, the lower quality firm would not last long on the roster of the law department (See my post of April 9, 2009: law firm quality with 25 references.).