Last week, the Wall Street Journal reported that hourly rates for lawyers are increasingly reaching $1000 per hour (or more). According to the article, several law firms have raised their highest billable rates to the $1000 mark, a level that had previously been considered taboo.
Some law firms have justified the high hourly rates by saying that higher costs, especially the climbing associate salaries, have made them necessary. But are those costs created by the firms themselves?
Perhaps the climbing associate salaries and hourly rates will encourage more clients to ask for alternative fee arrangements and get rid of the billable hour. After all, while I agree with Mike Dillon, general counsel of Sun Microsystems, Inc., (who is quoted in the article) that "very seasoned lawyers who can solve complex problems" are worth big money, I don't think that every hour of their time is worth the same amount, or that their time is necessarily valuable in and of itself. If solving the complex problem has value, that value isn't related to how long it takes to solve that problem.
As the article points out, "companies sometimes prefer to pay their lawyers a flat fee for each case or deal, believing it encourages more efficiency than billing by the hour." In fact, Stephen Susman of Susman Godfrey LLP claims to have just raised his hourly rate to $1,100 to "discourage" clients from hiring him on an hourly basis.
Thinking about alternatives to billing by the hour, but need help formulating a fee structure that makes sense for you and your clients? Contact me to schedule an appointment to discuss how I can help.
Comments