I was recently interviewed by the Fulton County Daily Report in Atlanta for their annual Rate Watch edition. This morning, I noticed that Law.com picked up this hourly rates article. In particular, the author of the article was interested in getting a legal recruiter’s perspective on what law firms were doing with their hourly rates. The premise seemed to be that law firms were slashing their hourly rates to satisfy demanding clients who were seeking some type of relief from escalating legal costs. Make no mistake, clients are clammering for relief. Law firms are feeling tremendous pressure to provide better value to their clients.
Hourly rates are but one component of cost, however. What clients really want is quality work at a reasonable price. They want good value. If an experienced paralegal can do the same work as effectively and as efficiently as a junior associate, then law firms and their clients are going to be bettered served by having the paralegal do the work. Conversely, if a $500/hr. partner can provide the same answer in twelve minutes that it takes a $250/hr. associate an hour to provide, then the value lies in seeking the counsel of the partner. Unlike the price of housing and the value of your 401k, big law hourly rates are not plummeting. Rather, for many firms they seem to be frozen at 2008 levels. I am not seeing, nor do I expect to see, the top tier law firms lowering their hourly rates across the board by 20%. What I am seeing, instead, is partners with rate sensitive clients moving to firms where their rates are the norm rather than the exception. I refer to this phenomenon as “right sizing”. I expect to see more and more “right sizing” in this economic environment.