Law firms: Charging more, getting less

THERE were groans in big companies’ legal departments in the mid-2000s, when the fees of America’s priciest lawyers first hit $1,000 an hour. Such rates have since become common at firms with prestige. A survey published this week by the National Law Journal found that they now go as high as $1,800. But the general counsels of large businesses are increasingly finding that they can ignore these extravagant rates, and insist on big discounts.Price-discounting tends to be associated more with used-car lots than with posh law firms. There was a time when a lawyer could submit his bill and be confident of receiving a cheque for the same amount. In banner years, some even got more, as grateful clients tipped them a little extra for a job well done.Since the financial crisis, however, the “realisation” of law firms—the proportion of their standard rates that they collect in practice—has been sliding. Earlier this month Peer Monitor, a company that tracks the legal industry, said that the ratio in the United States dropped from 92% in 2007 to an all-time low of 83.5% in 2013. British lawyers have seen a similar decline. “Discounts are rampant,” says Brad Hildebrandt, a consultant to law firms.The economic forces driving high-flying legal eagles into the bargain bin are no mystery. Demand for corporate legal work on such things as mergers, takeovers and…

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