This article from Law.com presents interesting survey findings taken from data supplied by some of the 200 largest firms in the U.S. For big firms, expenses are up, profits are down, and they're running out of places to cut costs.
What hit me, though, is the cost to the client. The average hourly rate, across all levels of attorneys, is an eye-popping $560. On average. That, my friends, is a lot of money.
As interesting, the survey revealed that just 13% of hours expended by biglaw were pursuant to alternative fee arrangements, which are intended either to limit the cost of the services or tie the cost to hitting an agreed performance standard. There has been a lot of talk about the need to move away from the hourly fee, but the gap between talk and practice is wide.
In short, to use an Amlaw200 firm, a client has to be willing to part with a lot of money. Precious few can afford that kind of expense. Which leads us to ask, doesn't it make sense for business clients to consider other kinds of firms to represent them?
I would suggest that in most situations it does. There are scores of top-notch smaller law firms in New Jersey that can provide services at a quality comparable to if not better than the big firms. In fact, many of those smaller firms are made up of biglaw alumni. As a client you get the same kind of talent, the same services, more manageable hourly rates (usually), and, in my experience, a greater willingness to use alternative fee arrangements.
The value proposition in business law firms, for most legal needs, is the lower and middle range of the law firm size spectrum.
How do you identify those firms, which may not be household names, or may be located miles away? Some answers to that question in our next post.