The Wall Street Journal cast a curious eye at lawyers in the $1,000 per hour club today. We were pleasantly surprised to see that it wasn’t filled with a bunch of outrage and indignation.
We’ve said for some time that the problem with BigLaw billing isn’t at the top end, and many of the sources quoted agree.
Janine Dascenzo, associate general counsel of General Electric Co., said that her company is willing to pay what it must when it needs a lawyer with “unique” expertise. “We’ll keep paying them a lot of money, because they’re worth that,” she added.
Even the reluctant clients have to admit that it’s a tough pill to swallow but worthwhile.
“Not many attorneys can command four figures hourly, and I do have trouble swallowing that,” said Thomas L. Sager, assistant general counsel at chemical maker DuPont Co. Still, he added, DuPont pays more than $1,000 an hour to a “select few,” particularly for mergers-and-acquisitions advice.
Dascenzo, by the way, started out in a boutique and worked at Squire Sanders before joining GE, so she knows the private-practice perspective. Sager has spent his entire career at DuPont; he’s not just reciting some dogma he learned in his formative years.
After the jump, we name names on the lawyers who got those rates and point out the problems.
The lucky lawyers identified as being part of that club were: hero-of-the-blog Harvey Miller of Weil Gotshal at $1,045; PE guru Kirk (“I put the Kirk in Kirkland”) Radke of Kirkland & Ellis at $1,250; former White House lawyer Greg Craig of Skadden at $1,065; M&A lawyer John Reiss of White & Case at $1,100; Bill Nelson (see below); and “top litigators” at Morgan Lewis.
It only got two paragraphs, but the real problem most clients have is with associates.
“Plenty of clients say to me, ‘I don’t have any problems with your rate,’ ” said William F. Nelson, a Washington-based tax partner at Bingham McCutchen, who commands $1,095 an hour, up from $1,065 last year. “But there is price pressure for associates, especially junior lawyers.
That seems perfectly consistent to us – it makes sense to pay $1,000/hour or more for someone with extensive experience in a unique practice area, but that rationalization falls apart when we’re essentially talking about untrained junior lawyers doing high-volume, low-complexity scut work.
Which, of course, is why there is so much pressure to outsource it.
The other big fallacy is that these are just top-line billing rates. No one who hires these folks is actually paying retail. Firms and clients always go through a silly dance about how much the discount is. The Journal provided the handy chart to the right to show the discrepancy. Note the increased discounts.
So clients are willing to pay for value – how are we going to bridge that divide? Where are the partners going to get that training that warrants the big hourly rates if firms can’t charge rates for junior associates high enough to attract and retain the most talented?
Should the firms be making that investment, instead of trying to pass that huge disconnect in value on to the clients?