Do you have any friends who used to work with you at your Biglaw firm before moving on to a sweet in-house position? Do you complain to them about the financial problems at your firm?
If so, you should probably stop — because your colleagues turned clients really do not care about your problems. Bisnow hosted a conference about the future of the billable hour (gavel bang: ABA Journal). Washingtonian reports:
Michael Helfer, general counsel of CitiGroup and a panelist at the Bisnow event, put it bluntly when he said CitiGroup’s inhouse legal department has been reduced during the past few years by nearly 300 employees, many of whom were laid off. The lawyers who are left have had their compensation slashed by as much as 60 percent. Helfer says he’s consequently lost his patience for paying his company’s outside lawyers premium fees. “The amount of sympathy I have for the argument that $1,000 an hour is a reasonable rate . . . is nil.”
This is why firms like O’Melveny are putting together five-year strategic plans that contemplate alternative billing structures. But will these new fee arrangements still lead to enormous profits? Some D.C. details, after the jump.
Can lawyers still reap huge profit margins without the billable hour? D.C. lawyers aren’t so sure:
[P]artners at all four of the firms represented on this morning’s panel aren’t exactly paupers. At Arent Fox, the average partner took home $800,000 last year, according to the American Lawyer. Skadden’s average partner made more than $2 million as did the average partner at Kirkland & Ellis, whose chairman also participated in the discussion. At Akin Gump, the average partner made $1.405 million.
But how do major law firms maintain those kind of profits without charging clients by the hour? There’s the rub. “It’s a big challenge,” said [Bruce McLean, Akin Gump chairman]. “We’re not so good at that yet.”
Of course, in-house counsel at Citigroup probably don’t care if law firms are maintaining their profits per partner either.
The Future of the Billable Hour [Washingtonian]
Citigroup GC Has No Sympathy for Law Firms Seeking Premium Fees [ABA Journal]
Earlier: Law Firm Billing Rates
The New Biglaw Business Model, According to O’Melveny & Myers