The United Kingdom's Magic Circle law firms have put the brakes on hourly rate increases, according to new research by a legal costs consultant.
A 2011 Hourly Rate Survey, released this month by UK costs consultant Jim Diamond, has revealed that the increase in hourly rates of top UK firms is slowing, thanks to "aggressive buying of legal services" as well as increasing pressure on law firms to drop their rates to remain competitive. As a result of such economic and competitive pressures, most of the UK's top law firm's hourly rates have remained stagnant over the last three years.
According to the research, the hourly rates of Magic Circle partners in 2011 are similar to those of 2008 at £600 ($945) to £700 ($1,103) per hour, down from £650 ($1024) to £725 ($1141) in 2010, but up from just £450 ($709) in 2009. In 2008, Magic Circle partners charged between £600 ($939) and £750 ($1173). Partners outside the Magic Circle are charging £425 ($670) to £600 ($945) in 2011, down from a top of £640 ($1008) in 2010.
In 2011, Magic Circle lawyers with five years of PQE charge between £425 ($665) and £510 ($798), down from 2010 during which they charged between £450 ($703) and £550 ($860). Newly qualified lawyers charge £300 ($470) per hour in 2011, slightly down from last year's rate of between £300 and £350 ($547).
"I believe partner rates hit the proverbial glass ceiling due to the economy and competition, and less so, client pressure," Diamond told Lawyers Weekly. "I believe if clients had the guts for the fight they would never have allowed rates to bounce back from the 2009 drop."