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That loud noise you hear is the sound of large law firms patting themselves on the back for jumping on the so-called alternative-fee bandwagon. The December 7 issue of the National Law Journal has extended coverage of its 2009 Billing Survey. The lead article pronounces in its headline: "Reality dawns on hourly rates: The recession forced firms to moderate or forego rate increases." (We can't forgo the opportunity to point out that forego means "to go before," while forgo means "to do without." Just sayin'.) The story, written by Karen Sloan, requires a subscription. (A shorter version with a less-congratulatory headline — "Firms' Billing Rates Inched Up During 2009, NLJ Survey Shows" — is available here.)
Sloan's lede is this:
It took a global economic meltdown and a major upheaval of the legal industry, but law firms seemed to get the message that 2009 was not the year to substantially increase their billing rates.
Clients: hold off on your jigs just yet. Seventy-six percent of the large firms raised rates in 2009. And Sloan reports that a survey by The American Lawyer has 81% of the top 200 firms expecting to raise rates in 2010.
The NLJ article trumpets, in bright red figures, that the average billing rate at the 250 largest law firms rose only 2.5%, to an average hourly rate of $372. By comparison, rates increased 4.3% in 2008, and 7.7% the year before. But check out the numbers behind the numbers and do the math. That means that BigLaw rates have jumped 15.1% since the start of 2007. I should just shut this blog down, since we're all revolutionaries now.
Sloan writes, "Not everyone is convinced that simply reducing billing rate growth is the right strategy for law firms in this economic climate." Then she gets the money quote from my friend Susan Hackett, the visionary general counsel of the Association of Corporate Counsel and torchbearer of its Value Challenge:
I can tell you that whenever I talk to clients they actually laugh when they hear about firms raising rates in this environment.
Maybe the law firms can't hear that laughing over all that backslapping.
