U.K. Hourly Rates Head in an Unfamiliar Direction
There has been a steady onslaught against the billable hour in recent years, not least of which is such as the demand by many clients for alternative billing arrangements. Still, the latest argument for not dividing your day into 6-minute segments may come as a surprise: For the first time in recent memory, attorney billable rates appear to be declining.
As recently as the end of 2008, the news was that despite a feeble economy, attorney billing rates had continued
their never-ending escalation. A National Law Journal survey for 2008 showed that nearly 71 percent of law firms reported an increase in the amount that they charged clients in 2008 as compared with 2007.
New research reveals that, at least in the U.K., the hourly billing rates for top law firms has declined by one third over the past 12 months. The research from Jim Diamond, an independent legal costs consultant, shows that partners at five of London's top firms (Allen
& Overy, Clifford Chance, Slaughter and May, Freshfields Bruckhaus
Deringer and Linklaters) billed an average of £450 an
hour, down from £675 a year ago. The reduced rates are the lowest in five years, and reflect the substantial discounts that these firms were forced to offer to hold off competitors in the economic downturn.
Banks in particular are negotiating fees aggressively. According to one Magic Circle partner, banks are seeking cuts of up to 30 percent. Diamond adds that in addition to discounting, lawyers are finding themselves forced to take on less
Diamond's research did not address law firms in the U.S., but 2009 data for U.S. firms will be out soon enough. Until then, I wonder: Are major law firms in the U.S. slashing billable rates, as well?
Posted by Bruce Carton on September 30, 2009 at 04:02 PM | Permalink
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