The combined rate shows the average of what both attorneys and non-lawyers charged during this period. The yellow line shows the inflation rate based on the consumer price index. However, since the trend report was first published, Clio has worked hard to convince lawyers that focusing on gradually improving their systems, such as increasing the hours they spent on billable work during the day, billing more than that time, and reducing the number of days it took to collect outstanding invoices, could have a huge impact on their overall success. Jasmine Singh, who changed Big Law to work as an in-house lawyer, shares tips on how to act diligently in the workplace and why generative AI will improve legal practice. For law firms, data on average billing rates by state and practice area is a good reference point if you're considering increasing hourly rates or figuring out how to structure value-based or flat-rate billing options.
For companies that want to gain some control over their external consulting expenses, one strategy is to negotiate with their firms how the combined rates should be combined. She has created and directed a myriad of important business and practice management publications, including the ABA's Law Practice magazine, where she served as managing editor for a dozen years. While many attorneys stick to hourly rates, others opt for fixed or hybrid rates, depending on the case and the client. These fees are calculated based on the time an attorney spends working on a case and can vary widely depending on several factors.
In recent years, with the expansion of the office management software company's client base, it has also become a valuable source of data for medium-sized law firms. However, as demand for legal services increased during the pandemic and firms struggled to keep up with rising inflation, rates increased across the legal landscape, not just among the most important. As the average billable hourly rate for attorneys has been increasing in recent years, even attorneys in states with the lowest average hourly rates saw rate increases of between 8% (New Mexico) and 25% (Iowa). For clients, understanding attorneys' hourly rates is crucial for budgeting legal fees, helping them to make informed decisions when hiring legal counsel, whether they are paying by the hour, using a value-based pricing model, or a hybrid model.
Understanding what lawyers and paralegals bill in different states and practice areas, as well as the percentages that rates increase (or decrease) year over year, helps law firms decide how to adjust their rates to remain competitive. That percentage tends to increase as the size of the company decreases, since the smaller the company, the less partners charge per hour for their work. You can also use tools that provide anonymous data from thousands of attorneys to compare rates by region, experience, and practice area, allowing you to set competitive prices without having to guess.
