At one end of the spectrum, there’s news that lawyer hourly rates among the so-called guilded circle have topped $1,500 per hour. According to a report in the Wall Street Journal, these aren’t even the top end rates. The most highly specialized among these legal elites, buoyed by inelastic supply and demand, can command almost $2,000 per hour. The rarefied set billing at these rates undertake price be damned high-profile litigation. Or they’re handling antitrust, mega mergers, acquisitions, tax, and large bankruptcy restructures.
There’s a wrinkle, though, to all this high-priced gold. According to Altman Weil’s 2014 survey, while overall big firm billing rates have gone up by 4%, on average firms have been discounting hourly rates by 21 to 30%.
Then there’s the other end of the news cycle. It’s the story about the Spanish civil servant employed by a city-owned water utility who hadn’t been at work for almost six years — but no one had noticed. Talk about an employee adding ‘value’ for clueless bosses. He was only found out when his employer tried to recognize him for 20 years of service. No gold watch but a certificate. After an investigation was opened, it was learned he “did absolutely no work” from 2007 to 2010 prior to his 2011 retirement. Some $30,000 is being sought in restitution.
The story reminded me of the lazy person’s 10 commandments that I once posted about. It concerned a scientific global study by “Lancet” that ranked nations according to the laziness of their populations. I hasten to add that I cast no aspersions on the Spaniards.
Of course the real reason for bringing up $1500+ hourly rates is to make the point these rates are highly atypical — even aberrational. Among the other 99% billing by the hour, those rates are unheard of and totally unrepresentative. Indeed, that’s precisely why the über hourly rate report was so newsworthy. Most lawyers aren’t doing so well.
As a matter of fact, I still remember when Jay Foonberg in his famous How to Start and Build A Law Practice was advising new lawyers without a notion of how to set hourly rates — to use burgernomics. In other words, he suggested indexing their fees to the local cost of a McDonald’s Big Mac. The suggestion was certainly more art than science. Use a multiple of 10 of the cost of a Big Mac — or something like that.
I haven’t had a Big Mac in years so I don’t know what they cost these days. Suffice it to say, however, that at an exalted $1500+ per hour that’s likely a multiple of some 400 to 1.
In Arizona, according to the most recent lawyer economics report, the median annual income was $75,000 for sole practitioners. Along with small firms, solos make up 2/3 of all lawyers. Other data suggests median lawyer annual income across the country might even be less. See “How about a raise?”
But for all I know there might be a big firm hereabouts charging 400X the cost of a Big Mac. But like I said, I haven’t had a Big Mac in a long time.
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Credits: Caricature of John Blair Balfour PC MP. Caption read “the Lord Advocate” by Leslie Ward at Vanity Fair via Wikimedia Commons, public domain;”A McDonald’s Big Mac hamburger, as bought in the United States,” by Evan-Amos via Wikimedia Commons, Creative Commons.
