Are increasing legal fees sustainable? According to interviews with General Counsel, that is, other attorneys who work in-house for large corporations, legal rates of $2,500 per hour are not sustainable. General Counsel believe the clients themselves may be part of the problem because they tolerate these costs.
It is understandable when there is a “bet the company in case,” the person who selects outside counsel wants to be sure they will not be blamed if the company loses the case. After all, they chose the most expensive firm to litigate the case. High prices should ensure the best outcome.
However, there are many times when a lawsuit is not a “bet the company case,” and fees are disproportionate to the recovery sought or the size of the lawsuit. This is where the failure to differentiate what is truly needed based on cost results in poor choices.
According to the article, even associate attorneys are billed out at $1,000 per hour. Candidly, an associate attorney may be smart, but that does not mean they are experienced. Clients may correctly assume an associate attorney who graduated top in their class at law school is smart and will work hard, but that is not the same as working efficiently and knowing what succeeds and what does not, answers only experience can bring.
In the widely acclaimed book by Richard Susskind, The End of Lawyers? Rethinking the nature of legal services, Susskind argues that increasing costs of legal services will compel market changes from “bespoke” (custom) services to “commoditization” allowing work to be completed more quickly, cheaply, efficiently and at a higher quality and consistency.
From handling over 150 trials, we have seen some of the best trial lawyers are not those coming from the fancy law schools, working in the big law firms, but the scrapie, street-fighting litigators who have what we call “street smarts,” showing they are able to improvise unique solutions in the middle of trial. As an added benefit, these lawyers win cases and do not cost $2,500 per hour.
References
Mulvaney, E. (2024, October. 4). Rock-starlaw firms are billing up to $2,500 per hour.Clients are indignant. The Wall Street Journal. https://www.wsj.com/business/rock-star-law-firms-are billing-up-to-2-500-per-hour-clients-are-indignant-61b248c2.
Susskind, R.(2009). The End of Lawyers?Rethinking the nature of legal services. OxfordUniversity Press.
