Some law departments are requiring that hourly rates be held constant for more than one year

The Client Advisory, March 2007 of Hildebrandt and Citigroup Private Bank at 2, concludes that cost control measures by law departments are having an effect. It discusses “declining realization rates among the 30 most profitable firms in the country and relatively flat realization rates among other firms.” The finding continued the downward tick of 2005 and, according to the report “may signal increasing discounts in response to client pressures or, in some instances, clients insisting on multiple-year rate schedules.”

On average among the large US firms, billing rates have been rising 5-7 percent a year. Hence, a law department that insists that its firms hold their billing rates constant for two years has extracted a 5-7 percent discount in the second year.