Wednesday, August 22, 2007
Law firm billing rates: The grand ceiling
Unlike most people who hire big law firms, I generally do not begrudge good corporate lawyers the money that they earn. That said, it is startling to read that the top rates at big money-center law firms have reached $1000 per hour. For that, a lawyer had better confer an enormous amount of value.
Some lawyers, apparently, think their clients will react, er, physically:
The highest-billing partners at top big-city firms have hovered in the mid-to-high $900 range for some time, but have been hesitant to cross the four-figure mark. “We have viewed $1,000 an hour as a possible vomit point for clients,” says a partner at a NYC firm. “Frankly, it’s a little hard to think about anyone who doesn’t save lives being worth this much money,” said David Boies, who bills out at $880 per hour.
Actually, we do not pay people who save lives nearly that much. If the hourly rate of even the top E.R. or critical care doctors were an actual constraint, our nation's big firm lawyers would make a lot less money. Indeed, if physician salaries were a cap on the billing rates of lawyers, many fewer leading Democrats would want to socialize medicine.
6 Comments:
By 
SR, at
Wed Aug 22, 02:03:00 PM:
Not only is the hourly rate ludicrous when compared with the compensation of even the highest paid physician, the concept of hourly billing for time spent not in direct contact with the client is also unknown to physicians.
By D.E. Cloutier, at
Wed Aug 22, 03:09:00 PM:
I don't have a problem with the hourly rate. But the hotshot lawyer damn well better not lose.
By 
, at
Wed Aug 22, 04:02:00 PM:
Honestly, yeah it sounds ludicrous -
...but (in a way) anybody paying $1,000+ per hour in legal bills deserves to be being paying $1,000+ per hour in legal bills.
Nobody's forcing them to pay that much and when you're dealing with high-caliber corporate law firms already, I think it's really debatable whether paying an extra $100-200 is really getting you anything. When we’re not talking about Skadden vs. a slip and fall lawyer, but say Skadden vs. Milbank or Baker Botts or Dechert or whatever--I think it’s really up for grabs how much of a difference in representation you’re getting.
Plus, before everybody starts getting angry at the lawyers, I think you need to keep in mind just how much (outside of money) the work as a lawyer at big corporate law firms absolutely sucks. (yeah, I know, a physician is hardly a 9-5 job either)
[Also, contrary to stereotype believe or not, for an associate the hours worked are often a decent amount more than the hours billed—and for a large law firm (as an associate) you’re only going to see a fraction of the money you’re actually billing come to you.]
By , at
Wed Aug 22, 06:13:00 PM:
Any client who visits the offices of a first-tier law firm with his/her eyes open can see the astonishingly indefensible level of overhead built into these hourly rates. While the quality of service provided by these firms is generally beyond reproach, the cost structures these guys operate under is a bad joke. But if the market lets them get these rates, they have limited motivation to change.
By , at
Wed Aug 22, 07:37:00 PM:
There are many top lawyers who are worth their high - even exorbitant - rates and I hired them when the matter justified the cost. I am most offended by the justification that "rising associate salaries" and other, supposedly uncontrollable, cost increases necessitate the rate increase. I've been a first year, big firm lawyer and I've used first year lawyers. I was overpaid in 1989 at $65K a year. Way overpaid. $160K a year in 2007. Unspeakable. When first year salaries went to $120K, I instructed my outside counsel that I would not pay for training at the resulting rates and required that experienced paralegals replace the 1st years and that anyone lower than a fourth year working on my matters had to be individually justified.
By Minter, at
Thu Aug 23, 03:01:00 PM:
The part that is difficult to rationalize is the discrepancy in pay between TYPES of lawyers. Those high fees are typically only affordable for larger corporations. One can pay so much for a corporate lawyer, to help write a contract or broker a mega deal; and yet the DA or a defense lawyer gets paid typically so much less when we are talking about prosecuting or defending (suspected) criminals that impact our safety; when so much more is riding at stake. It's like anything, though: that's what the market accepts.
Refering to sr's comment, the issue of high medical fees to cover high legal bills because of malpractice suits starts to sound like a catch-22, no?
