Unemployment’s at 9 percent. States are slashing their budgets. Twenty-somethings with newly minted JDs are tending bar, not to clients.
Still, as the WSJ’s Vanessa O’Connell reports Wednesday, a group of law-firm lawyers isn’t feeling the effects of the recession one whit.
Some big machers in the U.S. are asking as much as $1,250 an hour, significantly more than in previous years, taking advantage of big clients’ willingness to pay top dollar for certain types of services.
As the WSJ’s Nathan Koppel wrote back in 2007, a few pioneers had raised their fees to more than $1,000 an hour about five years ago, at the peak of the economic boom. But after the recession hit, many of the rest of the industry’s elite were hesitant, until recently, to charge more than $990 an hour.
While companies have cut legal budgets and continue to push for hourly discounts and capped-fee deals with their law firms, many of them have shown they won’t skimp on some kinds of legal advice, especially in high-stakes situations or when they think a star attorney might resolve their problem faster and more efficiently than a lesser-known talent.
Harvey Miller, a bankruptcy partner at New York-based Weil, Gotshal & Manges, said his firm had an “artificial constraint” limiting top partners’ hourly fee because “$1,000 an hour is a lot of money.” It got rid of the cap after studying filings that showed other lawyers surpassing that barrier by about $50.
Today Miller and some other lawyers at Weil Gotshal ask as much as $1,045 an hour. “The underlying principle is if you can get it, get it,” he said.
That said, firms are having a harder time selling rate hikes on their 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.
So where’s it all headed? Nowhere but up, say law-firm experts. “A thousand dollars an hour was a choke point for some clients,” said Peter Zeughauser, a consultant to law firms. “I don’t think there will be another significant psychological barrier until rates reach $2,000 an hour, which they will do, probably in five to seven years.”
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