• Over 60% of firms raised rates by 6% or more this year, with similar increases expected in 202, according to the 2024 Strategic Pricing Survey from LawVision.

• Client fatigue from rising rates may hinder profitability despite strong demand.

• Authors of the report identified three major pricing errors in firms: unnecessary discounting, rate stagnation, and fragmentation.

Big Law firms are expected to raise billing rates significantly again in 2025, continuing a trend of increasing legal fees, according to the 2024 Strategic Pricing Survey from LawVision, cited by Law.com. About 80 firms ranging in size from 75 lawyers to upward of 2,000 lawyers, and mostly headquartered in the United States, were included in the survey.

• This year, around 60% of firms raised rates by 6% or more, a pattern likely to persist due to strong demand in transactional and countercyclical practices.

• The survey underscores that while rate hikes are expected, profitability gains may not be as robust. 

• This tension between higher rates and client pushback presents a challenge for law firms in the coming fiscal year.

Firms expect to keep pushing on rates because their outlook on transactional work brightened this year, and rates have been surging the last couple of years, while demand has remained high, said the author of the LawVision report, Mark Medice.

"If your [rate increases are] 5% to 7%, given all those factors, would you expect the trend to break up, break down, or continue on track? It was consistent—most people said it would stay consistent," Medice said.

Pricing Errors

Despite the rate hikes and the increased adoption of AI, the survey notes that law firms still have gaps and inefficiencies in how they set their prices and ultimately achieve profitability. Moreover, 70% of firms interviewed said one challenge to pricing is that their partners don't know their market value.

Medice said he tends to see three major pricing errors in firms: 

• Unnecessary discounting - a result of lawyers not knowing their value. More than 50% of respondents said their partners "don't grasp the balance between costs, pricing and profits."

• Rate stagnation - when firms give clients special exceptions to a rate one year and it gets entrenched over the course of multiple years, with no clear mechanism on revisiting it.

• Fragmentation - when there's so much freedom or special cases in a practice or across the firm to set prices.

Client Pushback

"Clients pushing back harder" was chosen by just under 50% of respondents. But that doesn't mean less than 50% of firms are getting client pushback, it means that only those firms are finding it to be a challenge, according to Medice.

"I think there's pricing fatigue. The great challenge for the market is the economics still seem to be suggesting price increases, rate increases in particular,” he said. “But it's also fair to say the clients are really feeling pressure around those increases."