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In Search of Perfect Client Service Why lawyers don't seem to get it

WSJ on ever increasing hourly rate: anyone else get a sense of deja vu?

Posted in Hourly Rates and Alternatives

The front page of today’s Wall Street Journal contains an article analyzing hourly rate increases amongst lawyers.  After noting that average rates for top-end partners rose to $873, the Journal provides this insight (from TyMetrix data):

On the whole, lawyers last year pushed through the biggest overall annual rate increase, 5.1%, since the recession, when many firms froze prices or scaled back increases to keep clients happy.

* * *

Before the recession, many law firms relied on annual rate increases of up to 8% to fuel profit growth. The pace of such increases dropped sharply between 2008 and 2009 and has been inching back up since.

This “back to the future” is not happy news for clients, of course.  The increases are even higher at the largest law firms, who offer the expected spin to justify their increases:

Average hourly billing rates are up 7.1% for partners at the top 12 firms, which include Skadden, Kirkland & Ellis LLP, Weil, Gotshal & Manges LLP, Latham & Watkins LLP, Greenberg Traurig LLP, White & Case LLP and DLA Piper, Valeo says.

“Our rate structure reflects the real costs and competitive environment in each market and practice,” said Greenberg Traurig Chief Executive Richard Rosenbaum. “Collaboration allows us to use that structure to deliver both quality and unique value to each client.” The other firms either declined to comment or didn’t respond to requests for comment.

Some work clearly merits higher pay, and some lawyers provide extraordinary value at whatever rate they choose to charge.  But too many use the excuse of being special to justify increases that their work quality does not merit–hence the 5.1% reflects greater increases at the higher end of the hourly rate scale.

At the end of day, clients must decide whether they will be like sheep being led to the slaughterhouse, or whether they, as the buyer, will dictate terms.

  • Dan Hull

    “Collaboration allows us to use that structure to deliver both quality and unique value to each client” = Robot Generic Deeeb Bullshit quote of the year. Really embarrassing.

    • http://www.patrickjlamb.com/ Patrick Lamb

      C’mon, Dan, you know that dude was an “A” student at the Managing Partner bad cliche class.

      • Dan Hull

        Was in such stitches yesterday I could not even spell “Dweeb” right. Typo. Can you fix, old friend?

        “Robot Generic Dweeb Bullshit” may end up in Urban Dictionary. Want all these law dorks to know I am at least semi-literate. :)

  • http://twitter.com/FollowtheLawyer Jay Pinkert

    Without reporting realization rates at the same time, these “increases” could be entirely fictitious PR stunts.

    • http://www.patrickjlamb.com/ Patrick Lamb

      You are absolutely right, Jay. There have been any number of anecdotal reports that realization rates have declined, and one need only look to the recent reports on PEP and Revenue growth year over year to know the anecdotes are most likely correct.

  • http://www.austin-car-accident-lawyer.com/ James

    I agree with Jay, these are absolutely for PR!