[This post originally appeared on our sister blog, Guerilla Law Firm Blog. It addresses the growing dissatisfaction by in house counsel with the fees charged by traditional, “white shoe” law firms. We are unabashed in our opinions that the mega large, mega expensive large firm business model is unsustainable. We believe that boutique and virtual law firms represent the future of the legal industry.]
Although this blog is only a few months old, we have addressed the phenomena of rising billing rates several times. The legal employment sector continues to slough jobs yet billing rates go up. Sounds crazy but apparently its true. A recent post in the online edition of Corporate Counsel quotes a study showing that GC’s continue to be very concerned about billing rates.
Corporate Counsel quotes a 2013 survey performed by the Bethesda, Maryland based Consero Group. That survey found that 61% of corporate general counsels are dissatisfied with outside counsel’s billing rates. No wonder; the rates keep going up!
An almost identical percentage of those surveyed – 60% – said they planned to increase their use of alternative fees.
While there will always be the need for some hourly fees, the model is not conducive to saving money and increasing efficiency. Law firms have no skin in the game when paid hourly and have no incentive to hold down costs. We believe that good lawyers should know what their services are worth and be able to closely approximate the time and skill set needed to complete a given project. Flat fees should be the norm, not the exception.
If the assignment involves the uncertainties of litigation, firms can agree to cap fees or charge a lower fee but receive a bonus if certain targets are met. That changes the relationship and lets the lawyers share or enjoy great results or cases that are settled quickly.
The present legal services market sees BigLaw partners desperately trying to cling to the past by downsizing staff but without cutting partner pay. Their corporate clients are demanding concessions; concessions that can no longer be met with staff cuts. The present impasse can’t last much longer (and already we have seen major law firms close their doors.)
The solution isn’t firing more lawyers and it certainly isn’t jacking up hourly rates. The huge BigLaw model is dying, even if the partners at the top don’t yet realize it. Virtual law firms and speciality boutiques represent the next generation of legal services; firms that can put together the proper team, that have low overhead and that know the value of their services and can price accordingly.
Like what you are reading? Feel free to email us your comments or post your own story. Guest posts welcome.
Want to know more about the firm? Mahany & Ertl is a national boutique, virtual law firm specializing in tax and fraud litigation. We don’t try to do everything and we are proud that over half our clients pay on an alternative fee basis. Even when we bill hourly, our rates never exceed $350. More importantly, we believe we deliver a better product than that of lawyers charging 3 times as much.
For more information, contact attorney Brian Mahany. Those wishing to become virtual law “partners” and work with us are welcome to contact us as well. Brian can be reached at or by telephone at (414) 704-6731.
Want more information on Virtual Law? Read the Guerilla Law Firm blog.
Post By Brian Mahany