Annual rate increases are one of legal’s most consequential cost decisions, yet many teams still review them one letter at a time. Here’s how to run rate season as one governed event.
This is Part 1 of our Rate Season Series, a three-part look at what’s driving outside counsel rate season and how legal teams are getting ahead of it.
The first rate letter arrives in early fall. Another follows a week later as a PDF attached to a relationship partner’s email, and a third comes as a spreadsheet in a format nobody on the team has seen before. By November, someone in legal operations is maintaining a tracker that compares each firm’s proposed rates to last year’s, built in whatever time is left after the rest of the job. When the effective date arrives, most of the increases go through as proposed.
For many legal departments, that is what rate season looks like. Annual rate increases rank among the most consequential cost decisions a department makes all year, and they are often made with the least structure. The reasons come down to how the process is set up, which means they can be fixed.
Why rate season feels out of control
Proposals arrive on each firm’s timeline and in each firm’s format. Before the team can evaluate anything, it has to assemble scattered letters, attachments, and spreadsheets into something comparable, and that work eats into a window that was already short. By the time the information is in one place, the deadline is close and the review has to compete with everything else the department is responsible for.
The bigger issue is that each request ends up evaluated on its own. A six percent increase can look reasonable when it is the only number on the page. The same request might look very different next to what the rest of the panel is asking for, how it compares with the broader market, and what the increase will add to next year’s invoices. Building that comparison by hand across an entire panel is rarely realistic in the time available, so most teams never see it.
Basha Rubin, CEO and Co-Founder of Priori, described the pattern this way: “Outside counsel rates are a significant component of legal spend, but too often they’re evaluated one request at a time rather than as part of a broader pricing strategy.”
What the current approach costs
Without a clear point of comparison or the time to build one, the default becomes acceptance, and that default is expensive. Increases often run steepest in a firm’s highest-value practices, and on a large panel even a modest effective increase adds up quickly, landing in the budget before a single new matter opens. Because accepted rates become the starting point for next year’s requests, each cycle compounds on the last.
There is a second cost that is harder to see. When finance or the business asks why the department agreed to a particular increase, the honest answer is often that there was no clear basis to push back. That is an uncomfortable position for a legal leader who is otherwise expected to account for every dollar of outside counsel spend.
How to fix it: run rate season as one event
Departments that handle rate season well tend to treat it as a single, governed event with a defined start and finish. They decide in advance what they will ask firms for, how they will evaluate the answers, and what standard every firm will be held to. Four changes make that possible.
1. Collect every proposal in one window and one format
Set a submission window, invite the full panel at the same time, and ask every firm to submit in the same structure, organized by timekeeper, role, and category. A consistent format turns a stack of letters into a single dataset the team can analyze as responses come in.
It also helps to decide up front exactly what the team is asking for. Some departments request rates for specific named timekeepers, while others request rates by title, defined by role, practice area, and jurisdiction. Either approach works as long as every firm answers the same question. Scoping the request to the timekeepers who actually billed in a recent period keeps the review focused on the rates that will shape next year’s spend, and it keeps the team from spending time on people who rarely touch the department’s work.
2. Quantify every request
For each proposed rate, the team should know three things: the percent increase, the compound growth over recent years, and the dollar impact based on what the firm has actually billed. The percent increase shows the size of the ask, compound growth shows whether the request is part of a steady climb, and dollar impact shows what it will mean for the budget.
Together, those figures separate the increases that matter from the ones that barely move the budget. A ten percent increase on a timekeeper who billed a handful of hours last year may matter far less than a four percent increase on a partner who led the department’s largest matters. Ranking requests by financial impact lets a small team spend its limited time where the exposure is greatest.
3. Judge every request in context
A proposed rate carries more meaning when it is viewed alongside the rest of the panel, with practice area, seniority, and jurisdiction in mind. A firm asking for well above the panel’s typical increase at the same seniority level should be prepared to explain why, while a request that sits in line with the rest of the panel can often be approved quickly.
Context also keeps comparisons fair. The most useful comparisons match like with like, looking at requests for the same practice, seniority level, and jurisdiction. That context is what turns an isolated request into a decision the team can explain.
4. Apply your policy across the whole panel
Most mature departments already have a view on what an acceptable increase looks like for each category and tier. The hard part is applying that view consistently across hundreds or thousands of rates in a compressed window. When thresholds are set once and applied to every submission, each firm is held to the same standard, and the team can spend its negotiating energy on the genuine exceptions.
The same discipline carries into negotiation. A team can set a rule, such as capping partner increases at a fixed percentage across the panel, apply it to every request that exceeds the cap, and then work through the remaining exceptions one by one. Firms receive consistent counters grounded in a stated policy, which tends to make the conversation more productive on both sides.
Keep the record
Every decision to accept, negotiate, or decline should be documented alongside the analysis behind it. A useful record captures what each rate was compared against, why it was flagged, what the team countered with, and what was ultimately approved.
That record pays off in two ways. It gives the department a ready answer when finance or the business asks how a rate was approved, and it gives next year’s review a defensible baseline to start from. Over several cycles, the history also shows which firms consistently propose increases above the rest of the panel, and that pattern is useful context for broader panel decisions.
Where Priori Rate Review fits
Priori built Rate Review to make this approach practical across a full panel. Firms enter proposed rates through a structured request, and every submission lands in one consolidated dataset as responses come in. The platform calculates percent increase, compound growth, and financial impact for each rate, applies the thresholds the team sets, and puts every request in context across the panel. When a request doesn’t hold up, the team can counter individual rates or use AI to generate counterbids in bulk against a rule it defines, such as holding partner increases to a set percentage across every firm. Each decision, along with the analysis and negotiation behind it, is preserved for the record.
Rate Review was developed in collaboration with Priori customers and members of Priori’s Client Advisory Board. It is built on Priori RFP infrastructure, so teams already running RFPs on Priori will recognize the process.
More from the Rate Season Series is coming soon, including the questions to ask before you accept a firm’s rate increase.
Learn more about Priori Rate Review →
Planning your approach before rates land? Join our October 28 Advisory Hours session, Setting Up for a Smarter Rate Review Season →
