Page 7 of April’s Briefing Magazine has a couple of interesting charts on how:
2019 was a mixed bag of business for US firms operating in the UK, with headcount growth hitting utilisation and billing rates requiring attention
As someone who is fascinated in the ‘pricing’ (not costing) of professional services, it was the “billing rates requiring attention” part that caught my attention.
The chart above, as titled, is billing realisation rates for US law firms in both the US and the UK.
So: why do two different offices of the same firm have such different realisation rates just because of the Atlantic Ocean?
After all, you would assume the clients are largely the same. You’d also assume the work types are largely the same. You’d probably be okay thinking the leveraging is largely the same. You may even reasonable expect the person reviewing the bill in Finance is the same. And, you may reasonably expect the hourly rate in London to be lower than that in New York for all said lawyers.
So why is it that realisation rates are roughly 5% higher in the US than in the UK? Especially when you’d think it would be the other way round.
And what does this mean more globally? Where would Asia, Africa, and South America fit on this scale?
More importantly, does this say that the perception of value is geographic?
I have my thoughts/views, but as always interested in yours.