This past December, the Valeo Partners tradition continued, as I hosted our yearly “Early Indicators” webinar where I reported on new, exclusive data from the Valeo Pricing Platform that predicts attorney hourly rates that were reported on January 1, 2025.
According to the Valeo Pricing Platform and as reported on in the webinar, we expect to see a few major changes that will impact attorney hourly rates as we enter the second half of the decade, including a rise in rates for Partners and Associates, the impact that location and client annual legal spend have on rate changes, and an uptick in market drivers, including M&A as interest rates begin to lower and the regulatory environment becomes more deal-friendly.
Let’s dive in.
Reviewing the Past to Understand the Future
The Valeo Pricing Platform analyzes 2,900 law firms, over 20,000 clients, across 80 practice areas, and across 63 countries, and our data is updated daily from across 100 sources. What these sources have analyzed from 2020-2024, most notably, is a significant increase in Partner standard rates. These have averaged around $2,500/hour the past four years, with 9 of the AMLAW 50 reporting hourly rates of $2,400-$2,950/hour in 2024. This number will almost double in 2025, as we expect to see 17 firms in the AMLAW 50 report those same rates.
Another common trend over the past four years is three-year Associate rates hovering at or above $1,000/hour. In 2024, 16 firms in the AMLAW 50 reported those numbers, and we expect to see 25 firms in the AMLAW 50 shell out those wages, as well.
What’s on the Horizon for Partner and Associate Rates in 2025
As reported in the “Early Indicators” webinar, large law firm Partner and Associate rates will increase by 4-9% and 3-9%, respectively. We expect to see AMLAW 200 firms with 50% or more of their revenue derived from transactional work and in the top 25th quartile in PEP to raise their Partner and Associate rates by as much as 13% and 10% (respectively). This is due to the fact that these firms have a greater ability to increase and realize their rates.
The Major Rate Determinants of 2025
In 2025, expect to see the following as the main rate determinants across law firms.
- The client – Take a look at a client’s annual spend and their industry. At the top of the list are Financial Services, Technology, Social Media, Energy and Environmental clients that can afford the highest rates.
- Law firm practice areas – It’s not only about the client. Firms that practice across areas such as Tax, Transactional, Compensation and Benefits, and Antitrust may see higher rates compared to Insurance Defense and Labor & Employment, for example.
- Location of the timekeeper – Where cases are conducted is a major factor for attorney hourly fees. New York ranks at the top of most expensive rates for the United States, followed by Chicago and Los Angeles. London ranks high globally (#2 under New York), as well.
Economic Impacts on Hourly Rates
Many chief economics are optimistic about 2025 and trends across law transactions can support this.
First, M&A activity is expected to rise 10% in 2025, according to EY’s most recent EY-Parthenon Macroeconomic Outlook. This is due to a few reasons, including the conclusion of the election, a burst in economic activity, and the lowering of interest rates. Private and corporate cash levels are also predicted to increase, contributing to this economic wave of M&A expected this year.
And this directly impacts attorney hourly rates. While discounting will be less this year, Partners and Associates – due to these mergers – will experience a concentration of expertise into fewer firms, creating a smaller supply and a higher price of work. Support Staff will also grow in need, due to an increase of new positions created by technology that require experts in tech to execute.
Please reach out to valeo@greenoughagency.com if you are interested in receiving a recording of the webinar or to schedule a 1:1 session with myself to demo the Valeo Pricing Platform.