The WSJ (highlighted what the call the ‘Grand’ circle, lawyers who bill over $1000/hr. The article states several important facts;
- Hourly rates for partners actually rose by 3% in 2009 and 2010 and by 2.3% this year
- These rates are contributing to inflation across the $100 billion corporate law industry
- While partner profitability needs to keep increasing the profit taking is happening at the associate level, who can bill out at as much as $700/hr for associate time while partner compensations continue to rise
- Law firms had imposed an ‘artificial constraint’ on the $1000/hr mark but now have gotten rid of this
Considering the above and taking into perspective that the economy is battling its way out of one of the hardest recessions, what is the law firm strategy to retain/ grow profits while being cognizant of their client’s costs?
Corporate counsel from Du Pont and General Electric have been quoted in the article, as to having difficulty with partner and associate rates. Is this a no-win situation where corporate counsel continue to ask for discounts and alternative fee arrangements while law firms continue to depend on their relationships to maximize firm revenues and profits?
Relationship, alternative billing and discounts will only go so far. Law firms will need to innovatively consider options like legal outsourcing to understand that long term solutions need to be explored, understood, experimented with and implemented.
Associates nationwide have viewed solutions like legal outsourcing to be the source of attorney woes. The reasons stated above indicate otherwise. Legal outsourcing needs to be implemented as a solution to identify areas where clients can actually save while keeping billing rates for all other services. This way the clients get to save money on some areas and can pay top dollar for the expertise that law firms bring to the table.