New Zealand Law Society - That Seven Year Increase: charge-out rates

That Seven Year Increase: charge-out rates

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The average charge-out rate for employed lawyers in private practice is $270 per hour (exclusive of GST and disbursements), according to a New Zealand Law Society survey carried out in February 2015.

The data indicates that while charge-out rates increase steadily as lawyers gain more post-qualification experience (PQE), there is a significant step-up in rates for lawyers with seven years’ PQE. The survey showed a rise of just under 13% in the rate between six and seven years’ PQE – well ahead of the rise between other years (except for the rates charged for lawyers with 0-1 years’ experience and lawyers with two years).

A significant number of inquiries from lawyers about indicative charge-out rates prompted the Law Society to include a question in the 2015 New Zealand Law Society Hays Legal Salary Survey. The results of the legal salary survey are now being analysed by the Law Society’s survey partner Hays and will be made available shortly.

The Law Society’s charge-out rates question drew a response from 26% of lawyers employed (ie, not partners or directors) in law firms. As with the overall salary survey responses, this is an excellent result and means the resulting data is robust.

The data has been manipulated to remove extremes. An average and median rate from all the data provided is given for each year of PQE. A trimmed mean has also been calculated by removing the top and bottom 10% of rates from each PQE year. The range given has removed the top and bottom 10% of rates to ensure a more representative picture.

There are, of course, a number of caveats. Obviously these rates are indicative. As can be seen from the ranges given, charge-out rates vary widely. Experience, skill, time at a particular firm or practising in a particular field, location and type of work involved will all have an impact on a charge-out rate.

The assigned charge-out rate may also not be the rate at which a particular client is charged. The 2013 Waikato University Management Research Centre Interfirm Comparison found that the realised charge-out rate for senior solicitors was 79.6% of the average full charge-out rate. The rates given are the full charge-out rates.

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