In case you missed it, Issue 343 of my Weekly Digest of all things going on in #legal #strategy #pricing #vbp #CRM #clients #customers #innovation was sent to subscribers earlier today. Check it out here.
In case you missed it, Issue 342 of my Weekly Digest of all things going on in #legal #strategy #pricing #vbp #CRM #clients #customers #innovation was sent to subscribers earlier today. Check it out here.
Indeed, most law departments rate their legal spend management sophistication as middle of the road, which means that most law departments continue to rely on general billing guidelines and discounts as their primary cost-control measures.
But, multiple news outlets are reporting that the effect – perceived or real – of inflation is screwing with realised billable hour rates (see ‘Inflation Is Messing With Biglaw Billing‘ on Above The Law – as well as several others quoting from the six-month report recently published by Wells Fargo Private Bank Legal Specialty Group).
And all I have to say is this: There is an alternative – if you want to inflation proof your pricing, don’t bill by the hour (especially when you are getting paid for that hour, on average, 100+ days after you put it on your timesheet!)…
According to a post in the Law Society Gazette, which in turn quotes from Jim Diamond’s new book ‘The Legal Extortion Racket‘, partners at Magic Circle firms in 2007 charged clients, on average, between £625-£700 an hour.
If that’s not scary, then it is impressive.
An hour of that partner’s time today would set you back somewhere between £1,000 and £1,500.
We could probably call it and say that’s law’s version of ‘Moore’s Law‘.
But while we all might agree that’s an impressive, if not scary, number – if that’s your want or need you are, after all, getting an hour of a partner’s time. You’d have to imagine said partner would know a thing or two (otherwise how did they get to be a partner in a Magic Circle firm?) and get you the result you want. You may, at a stretch, even be able to argue that said partner works more efficiently than partners in other [non-Magic Circle] firms because they have done the rounds on big ticket matters and know a little about what they are talking about.
All of which could be perfectly true and fair.
So you let it go and turn your attention to another stat in the article quoting Diamond’s book:
Newly qualified lawyers at magic circle firms and US firms in London charge up to £600 an hour
To be clear, what we are talking about here is a ‘newly qualified lawyer‘ who most likely has a rudimentary understanding of the law at best, no idea what ‘utilisation‘ and ‘realisation‘ are, but by now will certainly know very well what a time-sheet is and how important that is to getting his/her/their bonus, charging clients £600 an hour!
That gives me a nose-bled just thinking about it.
For those who follow the hourly rate discussion, Diamond’s table makes for fascinating reading…
Any law firm looking for innovative, ‘out-of-the-box’ ways to retain their lawyers during this period now known as The Great Resignation could do a lot worse than take onboard a Faegre Drinker Biddle & Reath midlevel associate’s comments on the billable hour in the recently published American Lawyer’s 2022 Midlevel Associate Survey:
The billable hour is a cancer that will slowly eat away at you if you don’t get away from it quickly enough.