Can Firms Justify Rate Hikes Amid Salary Freezes & Layoffs? (Poll)
Update: Last month we reported on Altman Weil’s study (PDF) showing that of the in-house law departments surveyed, 75 percent said they will face budget cuts averaging 11.5 percent in 2009.
The big target for cuts? Outside counsel.
The report, which includes tips for negotiating fees, is interesting when juxtaposed with the news that attorney billing rates hit a new high in 2008. The high-end of White & Case’s partner fees peaked at $1,260 an hour, with the average partner billing $747, according to the National Law Journal’s annual billing survey. Nearly 71 percent of reporting law firms increased rates in 2008, with an average firmwide billing rate of $363 an hour, a 9.6 percent boost from $348 in 2007. In fact, many firms routinely increase rates up to 8 percent at the beginning of every year without adding value to their services, the ABA Journal reports.
Contrast those numbers with the recent procession of attorney pay freezes, and it seems many cost-conscious clients may wonder why they should pay more for the same services by attorneys making the same amount of money as last year.
Those clients may also point out that at some law firms, operating costs are down because of fewer employees, decreased office rent and no year-end bonuses to shell out—forcing firms to further validate increased fees.
Without rate hikes to supplement decreased business, will firms will start reporting salary cuts?
Some law firms have already announced rate freezes including, regional business firms Chorey, Taylor & Feil and Pepe & Hazard (PDF), or are cutting rates.
Tell us what approach you think firms should take by participating in the poll below.
Updated on Jan. 20 to include links to law firms that have frozen 2009 client rates.
