Business of Law
More lawyers charge $1,150 an hour, but ‘sticker price’ discounts hit collection rates
Posted Apr 10, 2013 8:46 AM CDT
By Debra Cassens Weiss
Attorney billing rates are higher this year, but the amount collected by law firms, when compared to standard rates, is at a historic low.
Chalk it up to clients unwilling to pay full price, says legal consultant Ward Bower of Altman Weil. Think of hourly fees "as the equivalent of a sticker on the car at a dealership," he tells the the Wall Street Journal (sub. req.). "It's the beginning of a negotiation."
The newspaper makes its case with data.
• More than 320 lawyers in a consulting firm’s database had fees of $1,150 an hour in the first quarter of 2013, up from 158 a year earlier. And the average billing rate for BigLaw associates with one to four years of experience rose for the first time this year to $500 an hour. The information is from Valeo Partners, a consulting firm that gathers public information for its database of billing rates.
• Before 2007, firms collected about 92 cents for every dollar of standard rate time their lawyers worked in 2007. Now they are collecting less than 85 cents. James Jones, a senior fellow at the Center for the Study of the Legal Profession at Georgetown law school, tells the newspaper that the rate is at “a historic low.” The collection information is from Thomson Reuters Peer Monitor.
“As law firms boost their standard rates, many are softening the blow with widespread discounts and write-offs, meaning fewer clients are paying full freight,” the story says. “As a result, law firms on average are actually collecting fewer cents on the dollar, compared with their standard, or ‘rack,’ rates, than they have in years.”