Biglaw, Billable Hours, Partner Issues

Billable Rates Have Little to Do With Attorney Experience

If you are a client looking for a lawyer, what will be the biggest influence on how much you pay that lawyer per hour? The excellence of the lawyer you hire? Please; pull yourself up off the ground and get back on your turnip truck.

Doesn’t it make more sense to pay more for lawyers at bigger firms? After all, size is what your looking for, not great legal work — right?

A new report, called the Real Rate Report, illustrates that firm size and city have more to do with price than the experience of the attorneys charging you money…

The study was compiled by CT TyMetrix Inc., and reported on by the American Lawyer. The methodology is pretty interesting:

They studied the bills sent to 36 large corporate clients between 2007 and 2009 — more than $4 billion worth of time sheets submitted by 90,000 people at 3,500 firms. They scrubbed the data to protect the identity of the billers and the billed. Then they got to work crunching the numbers.

And after looking at $4 billion worth of business, the report concluded that size matters:

[W]hat most struck us about the report was its portrayal of an industry fraught with inconsistency. The vast majority of lawyers — 85 percent — charge clients different rates for the same work. The location of the biller and the size of the biller’s firm — not the biller’s experience — are the variables that most influence how much a client will pay. And though in-house counsel talk a good game about keeping rates in check, they approve almost three-fourths of all timekeepers’ rate hikes.

Am Law summarizes some other points from the study in a nice little graphic.

Now, many people will claim that experience should matter more than size. And that is a perfectly rational argument. But there is also a compelling argument that size really does matter (and I don’t mean that sarcastically), and people should pay a premium for it.

When you are dealing with massive, so-called “bet the company” issues, you often need to bring overwhelming force to the matter. One inexperienced lawyer, working on his or her own, with minimal supervision — sure that kid should be giving you a billing discount. But what if you’ve got ten smart but inexperienced lawyers picking apart every aspect of the billion-dollar business you are thinking of acquiring? If those ten kids are being supervised by one of the world’s foremost experts in the field at the heart of the deal, then maybe you do need to pay a premium for those attorneys. Maybe the many second-years working in a huge firm, under proper supervision, are giving you more value than a fifth-year working alone.

One of the only ways you can explain these numbers is to hope that clients are acting in their own rational self-interest.

Should the city matter? That’s not as clear, but it looks like even lawyers are able to get a cost-of-living adjustment.

Study: Location, Firm Size Key to Billing Rates [American Lawyer]

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