An article in the DC Bar’s April 2010 Washington Lawyer caught our attention. The article is entitled “Cost and Effect: Financial Outlook Forces Law Firms to Reexamine Billing, Head Counts, and Services.” One observation made in the article is that the shortage of legal work at large firms is leading clients to pay a higher hourly rate for routine matters because the work is being done by more senior attorneys while the lowest level associates are being laid off or not hired. More after the break.
The interesting portion of the article is as follows:
As big law firms move forward with fewer associates and partners, it becomes more obvious that at many firms partners are doing some of the work associates used to do.
As work for certain practice areas such as mergers and acquisitions has dried up, partners at big law firms began having more trouble finding partner-level work. They are doing associate work when they can justify billing that to the client, thus draining the market for associates, one D.C. area partner explains.
That starts a domino effect. A partner who, for example, bills $700 per hour “may be doing a bit more hands-on supervising him- or herself, rather than relying on the $500 per hour partner,” he says. “The $500-level partner is running out of matters, so he’s doing more work that might otherwise be done by the $400-level associate. The $400-level associate is hogging more of the junior-level work. Anytime there is a shortage of work, anybody in a position to delegate is going to become less generous about delegating.
“It’s very natural,” he adds. “Attorneys are going to look out for their own numbers first and try to get work from wherever they can. If it’s not the level of work they’re used to, they’re less inclined to delegate where they believe they can justify billing it to the client.”
The result: In practice areas where there is a shortage of work, clients end up getting more senior-level attorneys, but at the higher price those attorneys bill.
Depending on the work involved, bumping work up to more senior-level attorneys can be a good deal for clients. If the work is complex, the client might prefer to pay a premium for a partner’s attention to the matter.
But when the work is less complex, more sophisticated clients will question whether certain work could have been done by lower-level attorneys.
Or by a smaller law firm that is properly staffed.
