Top law firms command premium prices. That part isn’t surprising.
Does that premium hold when they’re invited to an RFP process with fixed-fee or value-based pricing?
And if so, how high does a firm need to be ranked to earn such a premium?
Answer: Top 50 firms have prices that are 5% higher at the end of a competitive RFP
According to data from the PERSUIT platform, firms ranked in the top 50 of the Global 200 rankings have prices that are about 5% higher than firms ranked outside the top 50 when participating in RFPs.
Since a competitive RFP process often includes a price negotiation, we specifically looked at “final” price at the end of the RFP process rather than the initial price asked for in a firm’s first proposal. This gives us a much better sense of the true market price for legal services.
Interestingly, firms ranked 11-25 and 26-50 command similar premiums to those in the top 10, coming in at 5.3% and 5% higher than average, respectively.
When we get to firms ranked outside the Global 50, the prices begin to drop.
Firms ranked 51-100 in the Global 200 have prices that are neither more or less expensive than their peers.
And firms ranked 101-200 have prices below the overall average, coming in at 4.5% lower than average.
Conclusion: Sometimes it’s worth it to engage a top firm
There are times when it is absolutely worth the cost to engage a top firm.
Keep in mind that 5% is merely the average premium top firms charge relative to their peers. Like any firm, there are situations when top firms discount their work — and also times when they charge significantly more — for speciality work, for example.
Sometimes it’s worth hiring a top firm regardless of their premium. Top firms can charge what they do because they’ve earned a reputation for delivering results.
But you should expect to pay a premium for the reputation and experience of a top 50 firm.
If you found the data in this article helpful, check out our data benchmarking report for more: 5 Data Benchmarks to Use When Firms Ask: “How Can We Win More of Your Business?”