For those of us who have ever put together a billing chart for a pitch letter or RFP response, were you really surprised by the Fees and Pricing Benchmark Report: Law Firms & Legal Services Industry 2008 report released by raintoday.com?

The Greatest American Lawyer (gotta love the name … perfect for a new survey if you ask me) published these key insights:

• Discounting is common practice. 76% of all firms discount their fees versus published rates or rates they might have mentioned in an initial client conversation – with the average discount amounting to 9.9%.
• Larger firms are more likely to discount. Nearly all (89%) firms with 10 or more professionals on staff discount, versus only 59% of smaller firms.
• Service guarantees are widely used. Guarantees are offered by almost half (47%) of responding firms. The most popular guarantees allow clients to reduce their payment based on dissatisfaction with the value received.
• Standard rates vs. the actual rates differ for top-level professionals. For those firms that use a standard set of hourly billable rates for their professionals – either published or for internal use only – the median average realized hourly rate for highest-level professionals is 6% less than the standard or published rate ($400 vs. $375), and for upper-level professionals the median actual rate is 9% less.

So, here we sit in June 2008, in the middle of a recession, which may or may not be happening depending on which blogs you read, and I’m wondering how law firms, in general, will adapt to the changing marketplace and economy?

I’m continue to see reports of staff and associate layoffs, as well as “performance review” departures; summer programs cut back and starting dates put off; partner tracks extended, as well as partners being deequitized. In contrast to the negatives, I’m also seeing record revenue and PPEP posted by the AmLaw 100, including two $2 billion law firms. Yet, has any member of the AmLaw 100 or 200 taken a look at their overall hourly billing rate structures? Are they in-line with today’s economy? Is the business model, as we currently know it, sturdy enough to handle what might or might not be coming?

From every survey I have ever read, if clients perceive value, they are less inclined to challenge their law firms on price. Yet, in my conversations with legal marketers, and attendance at numerous GC panels, it remains obvious that law firms continue to have difficulty articulating this value, “differentiating” themselves from their competition, so to speak. We’re hearing about push-back from corporate counsel on fees, associate salaries and billables, as well as their desire to work together on a common solution. No threats of throwing the baby out with the bath water, yet. But, are we responding fast enough to their challenge?

So, Coolerites? What’s your crystal ball showing for the remainder of 2008? What changes do you foretell for the 2009 AmLaw 100?