Welcome to the first blog post in Valeo Partners’ newest blog series, “Pricing Simplified.” Each month, I, Chuck Chandler – Founder and CEO of Valeo Partners – will share my latest thoughts on deal pricing trends, top of mind topics from lawyers, and more.
What is Valeo Partners? I will be diving into our history and full background of the company in an upcoming blog post, but at our core, our proprietary technology allows us to pull the attorney billing rates, analyze them, and then provide clients with strategic advice about pricing solutions earlier than others. With our Valeo Attorney Hourly Rates and LPM Pricing Platform, we hope to encourage price transparency among law firms.
This first post in our “Pricing Simplified” blog series will cover just this. Earlier this month, I hosted Valeo’s first virtual “Early Indicators” webinar where I shared the 2024 attorney hourly rates and discussed rate-setting trends for this year. If you were unable to join me in January, I hope you can join me on April 9 at 11am EST for our second webinar where I’ll touch on attorney rates, but also include data for 2024’s first year associate rates.
While most of the information I shared in the webinar is confidential to those who use my platform, I can disclose how the platform aggregates and analyzes data to arm our customers with the most accurate information earlier in the rate-setting process. For this first round of rate releases, we pulled from 2,500 law firms who are using 11 different currencies (USD, GBP, EURO, HKD, RMB, JPY, SGD, CAD, NOK, BRL, PLN) across 62 countries. We are also able to share information on hourly rates from corporate counsels across 20,000 companies. We can also see LPM analytics across litigation matters and reveal what partners, associates, and staff paid their timekeepers.
This year’s Partner billed rate for the AMLAW 100 is on average $2,122. If you purchase the Valeo service, you can see who this is exactly, what firm they work at, their practice, and what their hourly rate was and will be for the coming year.
For our corporate counsel customers, we can share hourly rates outside of counsel, pricing engagements in the markets mentioned above, how to negotiate the best hourly rates based on factual market data, and leveraging the data to verify that outside counsel is not overcharging. The Valeo advantage for corporate counsels allows them to level the playing field with law firms by using our unique pricing tool.
This year’s data can be summarized as the following:
- Transactional rates will increase the most in 2024. Insurance Defense and Labor (except ERISA) will increase the least.
- Litigation rates will be led by Tax, Securities, Antitrust, ERISA and Energy.
- Partner increases will be less than in the past and Associate rate increases will be about the same.
- Firms with the highest billed rates + highest leverage + 50% or more of their revenue coming from transactional work will continue to be the highest PPP firms.
- The largest revenue and PPP firms will maintain greater control of their hourly rates and overall rate increases.
- Corporate rates will increase because of restrictions placed on law firms by their Client Counsel (MSAs, VCCs, first year associates, e-billing analyses).
- Rates (prices) vary by client. The larger the client, the lower the rate. Specific industries, technology and social media, for example, command lower rates.
- For 2024, discounts will be between 10% – 15% (when discounting is offered). For reference, for 2018 – 2023, average discounts for the AMLAW 100 ranged from 8% – 25% due to differences in matter types and clients.
- New York (#1) and London (#2) vie for the highest rates in 2024.
- High law firm hourly rates coincide with major metropolitan areas, economic activity and traditional “legal centers,” ranking New York City, Los Angeles, Washington DC, Houston, and Chicago at the top.
- Large national law firms price their services similarly in all US markets and slightly lower in non-US markets. US Law firms with EU offices price lower in the EU than in the US, for example.
Valeo Partners senior partner rates are not the only item that has increased since 2009. Comparatively, in-state tuition has gone up 24% in the past 15 years, senior partner rates for the AMLAW 100 have gone up 8%, and the price of a Big Mac has increased 3% respectively in this year span. Within law, the figure below shows the AMLAW 100 rate increases from 2009-2023.
After analyzing this early data, I predict some movement in the following areas in 2024:
- M&A is poised for a comeback, as corporate cash is hovering around $4 trillion.
- The United States will continue to price hourly rates the highest, with the UK and Asia Pacific following in line.
- AMLAW 5 firm rates will be similar to Magic Circle UK rates, with US rates averaging $1,645/hour and UK rates averaging $1,615/hour.
If this data is speaking to you, I hope you can join us on April 9 at 11am EST to discuss this information more in-depth and I’ll also be revealing first year associate rates for 2024. Register here and see you next month.