Bloomberg is reporting that fees are expected to jump between 6 and 7 percent in 2009. Of course, associates are blamed:
Even with corporate backlash, many firms are still planning fee increases of 6 percent to 7 percent for 2009, said Andrew Johnman of Barclays Capital in New York, which lends to law partnerships.
“You would’ve thought firms would have backed off in this environment,” he said.
Rate increases in recent years reflect rising costs, particularly in the competition for associates. Firms raised pay for salaried lawyers by 16 percent in 2006 and by 10 percent in 2007. Associate salaries held steady this year.
New law school graduates earn $160,000 a year in big New York firms. Some of them paid senior associates bonuses of as much as $115,000 last year.
Sure. Firms increase fees to subsidize greedy associates with an overdeveloped sense of entitlement. Profits per partner have nothing to do with it.
Still, some firms are trying to respond to the market conditions:
Lawyer Mark Peroff made a promise to the Japanese maker of the video game “Final Fantasy” when he moved to Hiscock & Barclay, a 200-attorney firm in upstate New York: I’ll cut my legal fees if you follow me.
The answer from his Tokyo-based client Square Enix Holdings Co.: “We’re on board,” according to Peroff, who works out of Hiscock’s Manhattan office and says he’s undercutting larger New York firms’ hourly fees by up to 20 percent.
Companies including Square Enix, Shell Oil Co. and Fidelity Investments are trying to reduce legal costs after swallowing 6 percent to 9 percent annual fee increases over the last eight years, according to the Association of Corporate Counsel. Hourly rates should drop in 2009, given the decline in legal business with the economic slowdown, the Washington-based group said.
As long as everybody has chocobos, who can complain?