August 2025 – Billing rates at U.S. Biglaw firms climbed sharply in the second quarter of 2025, continuing a well-established trend of escalating legal fees. According to the Thomson Reuters Institute Law Firm Financial Index, average billing rates surged by 7.4% year-over-year, despite only a modest 1.6% uptick in demand.
Uneven Growth Across Firm Sizes and Practice Areas
Not all firms benefited equally. While midsized and second-tier law firms reported healthy growth—2.6% and 3.5%, respectively—demand for top 100 firms actually dipped 0.6%, signaling a shift in market dynamics.
Industry-wide demand rose notably in litigation (+2%), yet sectors like M&A (+0.3%), corporate (+1.3%), and IP (–1.4%) lagged behind. The overall index score of 55, up from Q1, reflects cautious optimism amid economic uncertainty.
Why Rates Are Climbing
Several key factors are feeding this upward trajectory:
- Pricing power at top firms: LexisNexis data shows average partner billing rose 5.1% in 2024—the second-highest spike since its 2013 records began—with top-tier timekeepers in high-value sectors now billing north of $2,300/hour, and top associates nearing $2,000/hour.
- Elite lawyer rates hit extremes: For instance, leading attorneys at Quinn Emanuel now bill up to $3,000/hour, a 34% increase since 2022, underscoring escalating premium rates among marquee names.
- AI’s future impact: LexisNexis CEO Sean Fitzpatrick predicts that AI tools could boost rates for senior partners to $10,000/hour within the next decade, by delivering high-value legal services more efficiently.
- Superstar attorneys redefine compensation: The Financial Times reports that corporate superstars now earn over $25 million annually, with partner salaries doubling—from ~$700,000 to ~$1.4 million—over the past ten years. Billing rates for these power players now exceed $2,500/hour.
What It Means for Clients and the Legal Ecosystem
- Rising cost pressures for clients: Corporate legal teams face intensifying budget challenges. Many are demanding transparency on AI efficiencies, while some push for alternative fee models to mitigate cost escalation.
- Profitability more than margin expansion: Q1 data from Wells Fargo showed law firm revenues rose 11.3%, driven by ~9.5% increases in billing rates, even though actual demand lagged. This suggests firms are banking on rate hikes for financial stability.
- Growing disparity across firm tiers: As billing power concentrates among the elite, midsized and boutique firms must reframe their value proposition to remain viable partners, especially in cost-sensitive markets.
