Tuesday, December 11, 2007

Billing rates - whose fault is it?

This story talks about rising rates at big law firms. With associate salaries (and partner profits) climbing based on a perceived supply and demand issue, do you blame them, or do you blame the clients for paying the rates? According to the story, "'There's always been frustration. Now there's anger,' said Susan Hackett, general counsel for the Association of Corporate Counsel. " But to some degree I think you also have blame the clients.

There is no supply and demand issue when it comes to the number of lawyers and law firms in the market. But you do have a limited number of so-called "elite" firms. GCs have to decide whether it is always necessary to send all the work to the big firms, with the concomitant cost, or whether firms that charge less will suffice. (Heck, I am not cheap either, but I am compared to BigLaw.)

I see both sides of the coin. Face it, if something goes wrong the GC looks better if s/he can say "I hired the best guys money can buy." But that GC also looks very good if s/he can say, "The deal got done just as well, in less time and at half the price."

Sometimes it comes down to name, or the individual lawyer who happens to be at Firm X. And sometimes it is bet-the-company work or work where you need an army of lawyers jumping on grenades. Been there, done that. And it makes complete sense to me.

But before complaining too much, clients need to decide how much the name of Firm X is worth and whether good, first-rate lawyers that do great work while not charging an arm or a leg are appropriate for some, much or all of the work. In other words, if you are a client and you don't like the rates, don't just whine. Do something about it.

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