Mind the Gap

If you’ve ever travelled on the London Underground, you’ll be familiar with the constant announcement: “Mind the Gap.” It’s a simple but essential warning to take care when stepping between the train and the platform. In the legal world, there are two critical “gaps” that firms must navigate—both of which have significant implications for profitability and client perception. The first is the gap between partner rates and associate rates. The second is the pricing disparity within firms that operate both in major city centres and regional locations.

The Partner-Associate Rate Gap

The first gap is the ever-widening difference between what firms charge for partner time versus associate time. In theory, this makes sense: partners bring experience, strategic oversight, and gravitas to client matters, while associates handle much of the groundwork under their supervision. But in practice, the sheer size of this gap is coming under increasing scrutiny from clients who are becoming more sophisticated in how they evaluate legal fees.

From a profitability perspective, this gap is crucial. The traditional law firm model relies on leverage—the ability to bill associates at a high rate relative to their cost while keeping partner involvement at an optimal level. If the gap narrows, either because of market pressures or client pushback, firms may see their margins squeezed.

Yet, from the client’s standpoint, an excessive rate disparity can create unease. Clients want assurance that they are not overpaying for junior work, and they also want to feel that they have meaningful partner involvement on their matters.

If a client feels that a firm is charging a significant premium for a partner’s time but that partner is not materially engaged, they may start looking elsewhere. Managing this perception requires careful structuring of work allocation and clear communication about the value that both partners and associates bring to the table.

The Internal City-Regional Rate Gap

The second challenge relates to law firms that operate both in major city centres and regional locations. Unlike the straightforward comparison between large city firms and their regional competitors, this is an internal issue—one that creates complexity in pricing, client expectations, and talent management.

A firm with offices in London, Manchester, and Bristol, for example, faces a conundrum. Should it charge different rates for the same work, depending on where the lawyers are based? If so, how does it justify these differences to clients who increasingly expect consistency? On the other hand, if it tries to impose uniform pricing across all offices, it risks underpricing work in the city and overpricing it in the regions, making it harder to remain competitive in both markets.

This gap also creates internal friction. Partners in regional offices may struggle to justify charging the same rates as their London colleagues, even when doing equivalent work. Conversely, city-based lawyers may resist rate compression, arguing that the cost of doing business in a financial hub justifies a premium.

Meanwhile, clients with multi-office relationships may attempt to arbitrage rates, pressing firms to shift work to lower-cost offices while expecting the same level of service.

From a profitability standpoint, firms must tread carefully. A blunt “one-size-fits-all” approach to pricing can create inefficiencies, but too much variation risks confusing clients and weakening the firm’s brand.

The firms that navigate this best are those that establish clear principles for rate setting, ensuring that location-based pricing is transparent and justifiable, rather than ad hoc or reactionary.

Why These Gaps Matter

Ultimately, these gaps aren’t just about numbers on a rate card; they reflect deeper questions of value, fairness, and market positioning. If firms don’t actively manage these challenges, they risk margin erosion, client dissatisfaction, and internal discontent.

But those that take a proactive approach—by balancing leverage, structuring pricing strategies thoughtfully, and being transparent with clients—can turn these gaps into competitive advantages.

Just like stepping onto a train, failing to “mind the gap” in legal pricing can lead to a stumble. And in an increasingly scrutinised and cost-sensitive legal market, firms can’t afford to trip up.