Despite the economic climate, lawyer billing rates continue to grow well past the rate of inflation, with the most expensive lawyers getting increasingly more expensive, according to the 2012 Real Rate Report.

Jointly released last week by TyMetrix Legal Analytics and Corporate Executive Board, a research and advisory services company, the report is touted to be the legal industry's only benchmark report for law firm rates that analyzes actual invoice data to quantify and explain what is driving the billable hour.

The 2012 report includes analysis of more than $7.6 billion in law firm billings generated from 2007 through 2011 by more than 4,000 law firms, and roughly 120,000 billers, including about 80,000 partners and associates.

"The information in this report is intended to empower law firms and their clients to negotiate mutually beneficial rates and alternative fee arrangements with greater accuracy and confidence," says Craig Raeburn, general manager of TyMetrix. "We believe the analysis of real data helps them fill a growing information gap so they can continue to make fact-based decisions regarding how to staff, budget, and control the costs of legal matters."

Overall, the 2012 report suggests that the legal market is likely to continue to see rate increases for the foreseeable future, as has been the case through the recession and early recovery. After increasing 8.2 percent between 2007 and 2008, rates moderated briefly to 2.3 percent between 2008 and 2009, but since then have been growing at a rate of more than 4 percent annually.

"In a post-recession environment, there's greater pressure on in-house legal departments to demonstrate that they are getting value from their law firms," says Brian Lee, managing director of the Corporate Executive Board. "As the legal market moves toward greater cost transparency, the Real Rate Report equips in-house lawyers with the information needed to estimate outside counsel costs, ensure budget accuracy, and ultimately make better decisions on resource allocations that impact their bottom line."

Other key findings from the 2012 Real Rate Report include the following:

•The most expensive lawyers are getting more expensive. Rates for the highest-billing partners ($800-plus per hour) grew nearly three times faster than rates for the lowest-billing partners (less than $300 per hour), and rates for the highest billing associates ($500-plus per hour) grew nearly five times as fast as the lowest billing associates (less than $200 per hour).

•Clients are willing to pay a premium for large law firm work. The percentage increase for firms with more than 1,000 lawyers was double what the smallest firms experienced. The average hourly rates from 2009-2011 for law firms with 501 to 1,000 lawyers increased by 13 percent, compared with a 4 percent rate increase at law firms with fewer than 50 lawyers.

•Lawyers charge different hourly rates to different clients for similar work. In 2011, 90 percent of lawyers charged different rates for similar types of work. Intellectual property and commercial contracts practices had the highest percentage difference in rates, at 23.1 percent and 18.7 percent, respectively, while regulatory and finance/securities/banking saw the lowest percentage difference in rates, at about 11 percent.

•Higher spending equates to higher rates. Some in-house legal departments have had success consolidating work into a single law firm, but the data reveals that rates actually tend to increase as a law firm takes on more work from a client.

•Use of entry-level lawyers can add significant costs to legal matters. The data confirms that the use of entry-level lawyers, meaning associates with less than two years' experience since passing the bar exam, continues to decline. Notably, the data also show that matters staffed with entry-level associates tend to cost as much as 20 percent more.

The information used for the Real Rate Report is pulled from the TyMetrix Legal Analytics LegalVIEW data warehouse, which contains more than $24 billion in legal spending data aggregated from e-billing and time-management systems. The Corporate Executive Board does the report analysis.

For more information or to order the 2012 Real Rate Report, visit wvw.tymetrix.com.

The Corporate Executive Board, based in Washington, D.C., strives to help senior executives and their teams improve corporate performance. It offers comprehensive data analysis, research, and advisory services. It says its client and member network includes 85 percent of the Fortune 500 companies.

TyMetrix, based in Hartford, Ct., provides software and other services designed to help corporate legal departments, law firms, and claims organizations manage the business of law.