Priori Insights: The Hourly Cost of Hiring a Lawyer

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By Oliver Duchesne
| Legal Industry

At Priori, we help in-house legal departments find, hire and manage outside counsel without the costly infrastructure of a firm. Our clients use Priori’s vetted attorney network and streamlined technology platform for a wide range of legal needs. Data is a frustratingly rare commodity in the legal profession and at Priori, we’re aiming to change that. We’ve analyzed anonymized data from thousands of engagements on the Priori platform and identified a few notable takeaways, which we’re releasing in a series of three blog posts.

In last week’s post, we compared the frequency of flat rate billing in Priori’s marketplace (35%) vs. the industry average (16%) from Clio’s 2017 Legal Trends Report. This week, we turn to the remaining 65% of matters through the Priori platform — work that is performed on an hourly basis. Key takeaways are as follows:

  • Attorneys successfully hired through Priori are, on average, hired at lower hourly rates across geographies and practice areas than the industry average. 1

  • Attorneys hired in San Francisco through Priori command a higher average hourly rate than Priori attorneys in New York.

We hope these findings will be instructive both for lawyers looking to price their services competitively and clients seeking to understand how much they should be paying.  

Cost of Hiring a Lawyer

Geography

We analyzed the average hourly rate of a lawyer in the United States and two key metropolitan areas: New York and San Francisco.

Screen Shot 2018-06-27 at 5.51.59 PM

  • At $241 per hour, the average rate at which Priori attorneys are hired in the U.S. is lower than the industry average of $260 per hour. The average amount of experience for Priori lawyers hired through the platform is 17.9 years. We do not have this data for the industry average. The average for Priori attorneys who have created a profile, regardless of whether they’ve been hired, is $275.

  • In New York City, the average Priori lawyer who has been hired through the platform charges $266 per hour compared to the industry average of $344.

  • In San Francisco, the average Priori lawyer who has been hired through the platform charges $307 per hour. Clio’s report does not provide an industry average for San Francisco.

The comparison between New York and San Francisco Bay Area Priori billing rates is noteworthy.2  Despite the number of high-growth businesses based in San Francisco, San Francisco lags as the fifth largest legal market in the United States (New York is the largest globally).3 This discrepancy highlights an opportunity both for attorneys thinking of moving to the Bay Area, and for those already there, to differentiate themselves on price.

Practice Area

The below graph is a summary of what Priori attorneys charge, on average, per hour for work performed in a number of different practice areas.

 

The following list outlines what Priori lawyers charge in some key practice areas, as compared with the industry average.4

 

Screen Shot 2018-06-27 at 5.42.17 PM


What Drives the Price Difference?

Our data shows that Priori attorneys charge 8-31% less per hour across all geographies and practice areas considered. We do not have access to the composition of geography, practice area and years experience represented in Clio’s data, so we cannot definitively determine all of the reasons for the difference. Having said this, it’s likely our marketplace model is driving down the price. There are two ways it could do so:

  1. Priori asks that attorneys discount their rates as a condition of participation;

  2. Marketplaces create competition, transparency and ease-of-comparison that drive down costs for purchasers. Lawyers, in turn, benefit from a free business development channel and billing, collections and other administrative services which enable attorneys to spend more of their time doing billable work.

In addition, it seems likely that the straight-up comparison between the industry averages and corresponding Priori averages probably understates the savings realized on the Priori platform. Clio’s industry average includes lawyers who serve individual clients and businesses, while business work comprises substantially all matters completed via Priori’s platform — and business legal work, in general, is performed at higher hourly rates than work for individuals. 

Conclusion

Across geography and practice area, hourly rates of attorneys hired through Priori’s platform are consistently less expensive than the industry average, which may be attributable to a couple of key factors. These include the Priori discount offered by our lawyers and the downward pressure on price created by a marketplace model. Hopefully, our analysis can aid both clients and lawyers in more effectively pricing legal services moving forward.

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1The “industry average” in this piece represents the amounts found in Clio’s 2017 Legal Trends Report, a comprehensive and exhaustive analysis using anonymized billing information from 60,000 lawyers. All prices in this piece are in USD and represent the cost per hour. Unless otherwise stated, “average” refers to the statistical mean.
2And it is also consistent with anecdotal evidence.
3https://www.law.com/sites/ali/2017/12/19/alm-legal-compass-snapshot-the-us-legal-market/
4These practice areas were partly chosen because they represent an overlap between Clio’s data and our own.
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