This is the second in a three-part series on what’s driving outside counsel rate season and how legal teams can evaluate each rate increase that comes in. The first post, Why Rate Season Feels Out of Control, and How to Fix It, looks at why rate season gets harder each year and how teams can bring structure to it.
Rate increase requests often arrive with a brief explanation and a new number. When dozens land in the same few weeks, accepting them can feel like the path of least resistance. A short set of questions gives the team a clear basis for deciding which increases to accept, which to negotiate, and which to decline.
These questions also do a second job. When finance, the business, or a firm asks why a rate was approved or countered, the answers become the department’s explanation. A team that has worked through them can point to the comparison, the cost, and the policy behind every decision.
1. How does this rate increase compare to the rest of my panel?
A single request is hard to judge in isolation. When one firm asks for an increase well above what other firms in the same practice are requesting, that gap is worth a conversation. When a request falls in line with the panel, the team can approve it with more confidence and move on.
The pattern within a firm’s proposal is worth reading too. A firm that applies the same increase to every timekeeper is making a different case than one that raises a few senior rates sharply while holding others steady. Both can be reasonable, and seeing the pattern helps the team decide where to focus.
When a rate increase stands out, the most productive next step is usually a direct question to the firm about what is driving it, with the panel comparison in hand.
2. How does it compare to peers in the same practice area, seniority, and market?
Rates vary for legitimate reasons, and a fair comparison accounts for them. A senior partner in a major market and a mid-level associate in a smaller one belong on different yardsticks. Benchmarking each request against comparable firms by practice area, seniority, and market shows whether the proposed rate sits in a reasonable range for the work.
Peer context can cut either way. A rate that looks high next to the rest of the panel may be in line with the market for a specialized practice, which gives the team good reason to approve it. A rate that looks ordinary inside the panel may still sit well above what comparable firms charge, which is worth raising before it becomes next year’s baseline.
3. What will it actually cost us?
The percentage tells only part of the story. The real cost depends on how much work the firm does for the department, so it helps to measure each request against recent billing and to add up the impact across all of a firm’s timekeepers. A firm-level total is often the clearest way to see which proposals deserve the most attention.
It is also worth looking at compound growth across several cycles, since rates accepted this year become the baseline for next year’s request. A rate increase that seems modest on its own can read differently alongside the ones that came before it. Three consecutive annual increases of six, seven, and eight percent, for example, add up to more than 22 percent over the period. Viewed that way, a request that looks routine in a single year may warrant a closer look.
4. Does it fit the policy we’ve set?
Many departments already have a view on acceptable increases by category and tier, even if it isn’t written down. Applying that standard consistently across every firm is what makes rate decisions fair to firms and defensible inside the business.
If the department doesn’t have a written policy yet, rate season is a good time to draft one. A practical starting point is a set of acceptable ranges by role, with room to vary by practice area or market where the department’s needs differ. The policy should also say how exceptions are handled, so the team knows in advance what justification it will accept for a request outside the range.
Some departments share their expectations with firms when the rate request goes out. Doing so can set the tone for the cycle and reduce the number of proposals that need negotiating later.
5. Has the firm’s AI efficiency shown up in its pricing?
Many firms now use AI to complete work faster. One recent industry analysis found that only 29% of firms have adjusted their fees for AI-augmented work (Artificial Lawyer). That doesn’t make every increase unjustified, though it is a fair question to raise, especially for work where AI should be making a visible difference.
The conversation can start simply. Ask which of the department’s matters or workstreams the firm is using AI on, how that has changed the time the work takes, and how the firm reflects those efficiencies in its pricing. For some types of work, the answer may point toward alternative fee arrangements. For others, it may simply inform how the team weighs the proposed increase. Either way, raising the question signals that the department is paying attention to value as well as rates.
Putting the answers together
No single question settles a rate decision on its own. A request that is high against the panel but in line with the market, modest in percentage but significant in dollar impact, or within policy but part of a steep multi-year climb calls for judgment. Working through all five gives the team a complete picture, and it makes the eventual decision to accept, negotiate, or decline easier to explain.
The answers are also worth recording. A short note on what each request was compared against and why the team decided as it did turns this year’s review into a reference point for the next one.
Asking these questions across a full panel
Working through these questions for one firm is manageable. Across a full panel, with hundreds or thousands of proposed rates arriving in the same window, it is where even disciplined teams run out of time.
Priori Rate Review is built to answer the first four at scale. It calculates percent increase, compound growth, and financial impact for every proposed rate, benchmarks each request against the panel and comparable firms, and applies the team’s thresholds across every submission automatically. When requests fall outside policy, the team can use AI to generate counterbids in bulk against a rule it sets, such as holding every partner increase to no more than five percent across the panel, and then work the exceptions by hand. The fifth question remains a conversation, and the time saved on the first four leaves room to have it.
Learn more about Priori Rate Review →
Working through this year’s requests? Join our October 28 Advisory Hours session, Setting Up for a Smarter Rate Review Season →
