The top 100 U.S. law firms charged clients an average of $961 an hour in the first nine months of 2023, a recent report found.

The average blended rate billed by Am Law 100 firms is a 4.8% increase from the $917 an hour those firms charged throughout 2022, according to the hourly rates analysis from e-billing and matter management platform Brightflag.

“In 2022, the blended rate increased by 1.5% when compared with 2021,” the report said. “This means that the increase experienced in 2023 was over three times higher than the increase of the preceding year.”

Driver of increase

The blended rate was calculated by dividing the total amount that outside counsel billed for work across timekeepers by the total hours billed. 

The analysis was based on Brightflag's database of billions of dollars of outside counsel spend, and it used billed rates as opposed to rack rates or requested rates.

The report said an increase in blended rates can stem from a rise in the rates charged by individual fee earners or an uptick in billing by fee earners that charge higher rates.

“Brightflag’s data on the average rates charged per fee earner type suggests that the key driver of increases in 2023 was a rise in individual fee earner rates, as opposed to a drastic change in matter resourcing,” the report said.

Different firm categories

Perhaps unsurprisingly, timekeepers at firms ranked higher in the Am Law 100 rankings charge more than firms lower in the list.

One example cited is that partners at the top 25 firms charge an average of $1,433 an hour, which is almost double the $729 average hourly rate charged by partners at firms 51-75 in the rankings.

Associates at the larger firms also charge more than their peers lower in the rankings.

For example, associates at the top 25 firms charge $951 an hour on average compared to associates at firms ranked 51-75 billing $617 an hour.

“This demonstrates the significant savings that can be made by moving work from the highest-cost firms to smaller, more cost-efficient firms,” the report said.

Geography

The Brightflag analysis also found that partners at the Am Law 100 firms based in larger metropolitan areas charge more than their peers in other locations.

Partners in New York lead the way by a significant margin, with those attorneys charging an average of $1,562 an hour.

The second-highest hourly rates are charged by partners in the Los Angeles area, with those lawyers billing $1,192 an hour on average.

At the other end of the spectrum, partners in the Kansas City area charge $764 an hour on average. 

“Brightflag’s data shows that even within the top 100 U.S. firms, partner rates in the largest cities are 40-50% higher than those in smaller cities,” the report said. “Therefore, working with outside counsel in smaller cities can have a major impact on outside spend, even if you continue to work with top firms.”