After Freezing Fees, Wal-Mart GC Considers Cutting Associate Billing Rates
Wal-Mart general counsel Tom Mars says he is considering initiatives to lower associate billing rates at the company’s outside law firms “to some point where they reflect value.”
In an interview with the Daily Journal (sub. req.), Mars said he is not the only general counsel concerned that billing rates for low-level associates are out of line.
He senses his counterparts at other large companies won’t tolerate any more associate rate increases “particularly first-, second- and third-year associate rates that don’t bear any relationship to value at all.” He goes on to say Wal-Mart is considering initiatives “to bring those costs for junior associate rates within some reason—to bring those rates to some point where they reflect value.”
Mars’ focus on associate billing rates comes less than a year after he announced Wal-Mart was instituting a moratorium on across-the board increases in law firm billing rates. Mars told the Daily Journal “we had almost no resistance whatsoever” to the rate-freeze, although law firms were allowed to request rate hikes for lawyers who were contributing significant value on important matters. Wal-Mart received 2,000 rate hike requests for individual lawyers—74 percent fewer than the previous year—and granted fewer than 10 percent.
Mars believes high associate salaries are driving up billing rates, but he also thinks firms’ quest to maintain high profits per partner are part of the problem. “Where do some of the law firms get the idea that the partners were worth a million dollars a year in income?” he asked in the Daily Journal interview. “There are some worth that and some who are worth more. There are plaintiffs’ lawyers who make a lot more. But the idea that there’s some kind of constitutional right to make a million dollars if you’re a partner in an Am Law 150 law firm seems pretty absurd to me.”
