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Category: Billing Rate Survey

Report: New Jersey Hourly Rates Near the Top Nationwide

October 31, 2017

A recent New Jersey Law Journal story by David Gialanella, “NJ Hourly Rates Near the Top Nationwide, Report, Report Finds” reports that New Jersey trails only a handful of markets when it comes to average hourly billing rates for law firms, a recent report has found.

The state’s $272 average hourly rate for 2016, which takes into account both lawyer and nonlawyer rates, ranks sixth in the nation, behind New York ($297), Connecticut ($296), the District of Columbia ($292), Nevada ($285) and California ($277), according to the “2017 Legal Trends Report” issued by Clio, a Canadian cloud-based researcher that tracks legal industry metrics.

New Jersey’s $272 average combined rate placed it ahead of markets such as Illinois ($261), Maryland ($257) and Pennsylvania ($243), the report stated.  New Jersey also was sixth in lawyer hourly rates, at $288, again behind the same five markets, which all topped $300 per hour.

The average nonlawyer billing rate for New Jersey was $199 — second only to Connecticut, whose $228 rate was highest by far. New Jersey’s average nonlawyer rate put it firmly ahead of Nebraska ($175) and Nevada ($174), as well as Pennsylvania and New York (each $171), according to the report.

“Real” hourly billing rates, which are adjusted for cost of living in 2016, also are included: In New Jersey, that rate is $251 for lawyers, $174 for nonlawyers and $237 combined.  The latter number trails the same five markets mentioned above, as well as Florida, Illinois, Texas, Georgia, Arizona and Pennsylvania.  The data was collected from some 60,000 Clio users, as well as surveys of legal professionals and consumers of legal services, the report notes.

The report is critical of law firms for what it calls poor “utilization” rates—contending that lawyers on average nationwide spend only 2.3 hours of the eight-hour workday on billable tasks.  It pegs the utilization rate in New Jersey at 30 percent, which is one point higher than the national rate of 29 percent (meaning that a New Jersey lawyer spends 2.4 hours per day on billables, rather than 2.3 hours).  The report ranks lawyers in West Virginia and Maine at the top in this category, with realization rates of about 40 percent.

New Jersey is toward the back of the pack when it comes to realization rates, the report finds: At 79 percent, the state ranks 34th and is well behind Utah, South Dakota, South Carolina, Wyoming and New Hampshire, which approach or eclipse 90 percent, but still ahead of such large markets as New York (39th), Florida (43rd), Delaware (46th) and D.C. (48th), according to the report.

New Jersey also fares badly in collection rate, according to the report.  At 82 percent, it was ahead of only six markets in that category: Arizona, New York, West Virginia, D.C., Mississippi and Michigan.

NALFA Analysis: Partner Bankruptcy Rates

October 27, 2017

NALFA conducted a survey of partner hourly rates in bankruptcy cases.  NALFA examined dozens of court filings in bankruptcy cases over the past couple years.  The following results of our survey are the average of partner hourly rate ranges in major legal markets:

2017: $1005-$878
2016: $921-$807
2015: $886-$783

Key findings:  Not only have partner rates increased every year, but the variance (i.e. the range of rates) has increased as well.

NALFA Conducts Custom Hourly Rate Surveys

July 4, 2017

NALFA conducts custom hourly rate surveys for law firms and courts.  NALFA surveys provide the most accurate and current hourly rates in a given practice area and jurisdiction.  Our hourly rate surveys assist state and federal courts in awarding attorney fees in large, complex litigation throughout the U.S.  Our surveys provide hourly rate data that assist courts in calculating attorney fee awards. 

Litigators and special fee masters rely on our hourly rates surveys in their fee requests and court recommendations.  Indeed, our surveys provide the accurate and authoritative information to prove prevailing hourly rates within a given jurisdiction and practice area.

Our hourly rate surveys are peer-benefiting.  As such, all participants of our survey will have access to the survey results.  In a comprehensive report our survey results will show hour rate data for partners and associates in an underlying practice area.  Indeed, participates of our surveys will see how their hourly rates compare to those of their peers in the same jurisdiction.

NALFA Quoted in ALM’s Daily Business Review

March 1, 2017

NALFA was quoted in the ALM’s Daily Business Review (DBR), the leading source of daily legal and business news in South Florida, in a news story by Monika Gonzalez Mesa, “Are Florida Billing Rates on the Rise? It Depends”.  The story reads:

At least six large Florida-based law firms raised their billing rates in 2016 and plan to do so again this year.  But the higher rates may not be typical for Florida firms across the board.

In a survey conducted by ALM, Akerman, Greenspoon Marder, Holland & Knight and Shutts & Bowen all projected that they will raise hourly billing rates by more than 3 percent in 2017, as they did in 2016.  Greenberg Traurig also said it raised billing rates by more than 3 percent in 2016 but expects the percentage increase to be lower this year.  And Carlton Fields reported that it, too, raised its billing rates in 2016, although the increase was not as high.  It says it plans to raise them again this year.

But many variables go into determining billing rates, and the upswing does not necessarily represent an overall trend for Florida law firms, lawyers say.  Billing rates vary widely with location, market competition, complexity of practice, demand for that practice and the individual lawyer's experience.  Firms strive to find the rate that covers overhead without turning off clients while still keeping the firm attractive to valuable existing talent and potential recruits.

"It's hard to get a general consensus on billing rates because they tend to be geography focused and practice driven," said Terry Jesse, executive director of the National Association of Legal Fee Analysis, a Chicago-based nonprofit.

Bankruptcy court records, however, can provide a snapshot of billing rates because attorneys are often required to list their rates when representing clients in bankruptcy.  ALM Legal Intelligence collected 2016's hourly billing rates for partners, associates, of counsel and paralegals from these published rates in the 20 largest federal bankruptcy jurisdictions.  The Daily Business Review compiled a Florida list based on this data, offering a view of billing rates in the state.

The largest group of Florida attorneys in the list reported rates in the $200 to $350 an hour range.  The next biggest block provided rates that ranged between $350 and $500 an hour.  A smaller but still significant tier billed $500 or more per hour.

Among the highest paid attorneys were Greenberg Traurig partner Paul Keenan, who billed $765 an hour, Paul Singerman, co-chairman of Berger Singerman, who reported a rate of $695 an hour, and Robert Furr, founding partner of FurrCohen, who listed his rate at $650 an hour.

"I know guys that charge even more than that—a lot more," said I. Mark Rubin, an attorney in Jacksonville, who was included in the top-tier of the list with a billing rate of $575.  "Our clients are willing to pay for our services because they can't get the type of representation we give anywhere else."

Rubin represents groups of small investors who were caught up in aggregated-investor building-purchase schemes in the early 2000s.  Many of the deals involved fraud and left seniors without access to their life savings.  Rubin said he was included in the 2016 ranking because he used bankruptcy court to keep a 30-story building from falling into the hands of a predatory lender.

Bankruptcy billing rates, however, don't necessarily reflect billing rates for other practice areas, lawyers say.  Often, bankruptcy cases involve limited funds and limited recovery, so when deciding what to charge, lawyers have to consider that their compensation—especially in trustee and debtor cases—will also be limited.

"Bankruptcy traditionally has higher hourly rates, not only because of the complexity, but because of the risk that lawyers have to take on," said Luis Salazar, managing partner at Salazar Jackson in Coral Gables.

Bankruptcies make up about 25 percent of Salazar's practice now, but seven years ago, when the economy was doing poorly, it was perhaps as much as 50 percent, he said.  "For our market I don't think you're seeing much increase in bankruptcy billing rates because the demand is not there," he said.

Salazar is listed as charging an hourly rate of $500 in 2016.  Now, he says, his hourly billing rate has gone up to $550.  But much of his work, he says, is now based on a flat fee or alternative fee agreement.

Another reason billing rates in bankruptcy cases may not accurately reflect the rates attorneys charge in other practice areas is that bankruptcy attorneys are not as constrained by the power and weight of market competition.  In bankruptcy court, it is judges who approve the billing rates.

"The [bankruptcy] rates tend to be a little higher than they would be in the market because you have a judge looking over the rate as opposed to the competitive market," said Gary Mason, founding partner at Whitfield Bryson & Mason in Washington, D.C.

Bankruptcy billing rates do offer a window into legal fees.  But they are a very small part of the market overall, lawyers say, making it difficult to extrapolate rates throughout the industry from that data alone.

In fact, legal billing rates vary significantly and depend largely on the practice area and the complexity of a case, attorneys say.

"If it tends to be very complex work, the rates are going to be higher—and generally the larger firms do that [kind of work]," Mason said.  "But you'll usually find smaller boutique firms that have similar high rates because they have specialized expertise."

In South Florida, lawyers say the highest hourly rates are in specialty areas: complex cross-border, mergers and acquisitions, antitrust litigation, project finance, international taxation and international arbitration.

"The highest rates we see in Florida pretty much max out at around $850 locally, but you do have a small cadre of Miami-based partners working on national major market matters who charge New York rates—over $1,000 per hour," said Joe Ankus, president of the Florida-based legal recruiting firm Ankus Consulting.

Ankus says that firms tell him what they expect their lawyers' rates to be when they hire lateral partners.  "While $765 is definitely in the top five-to-ten percent of rates for all of the South Florida legal market, it is not considered high for an AmLaw Top 25 firm with an office in Florida," he said.  "It would be closer to middle-of-the-road, depending on the practice area."

At the global firm Holland & Knight, a market analysis and information gathering process begins a few months before the firm implements a rate change.

"We try to gather as much information and market data as possible," said Holland & Knight Operations and Finance partner Douglas Wright.  "We use market data compiled by large accounting firms and other consultants to analyze and evaluate our rates.  We spend a lot of time poring over the data."

The distilled information is then shared with practice leaders, who further discuss current market considerations and demand for each lawyer in determining a rate, he said.

"From all of that process, we develop a rate for each individual lawyer, which is an attempt, again, to balance market considerations, client considerations, and to make sure the firm is in a position to demonstrate the value proposition that it brings to our clients," Wright said.

According to Jesse of the National Association of Legal Fee Analysis, antitrust litigation is generally the most expensive litigation, and white-collar defense also has a high hourly rate.  Bankruptcy tends to be more straightforward, he said, but the more complex the litigation, the higher the hourly rate.

"The lowest rates out there tend to be insurance defense rates because the insurance companies will give them a book of business," Jesse said.  "There tends to be a difference in how plaintiffs attorneys bill and defense attorneys bill.  Defense work tends to be on hourly-based, while plaintiffs attorneys can bill on a contingency."

Last month, the rates law firms charge for their services grabbed the public's attention in Florida when the state revealed that four law firms had billed $97.8 million since 2001 for their work representing Florida in a battle with Georgia over water rights.  According to a spreadsheet obtained by the Miami Herald and the Tampa Bay Times, Latham & Watkins charged $395 an hour for lawyers with three years or less experience, $575 an hour for lawyers with between three and ten years of experience and $825 an hour for work performed by partners.  Foley & Lardner charged $220 an hour for associates with five years or less experience, and $450 an hour for partners.

While hourly billing rates are not likely to disappear any time soon, lawyers say that over the past few years, clients have become savvier at looking for predictability, efficiency and good value.  For longer projects, they want to know what alternatives they have.  Salazar said his firm embraced the change and created a system based on project management methods from other industries to zero in on what clients are looking for.

"Most of the work we're doing now is either project billing-based or flat fee-based or some sort of alternative fee," he said, "For bankruptcy, there's still an hourly fee approach, but for nonbankruptcy matters, including commercial litigation, transaction and the compliance work we do, clients are really seeking some alternative billing basis."

Race to the Bottom: Class Action Lawyers are Low-Balling Fee Requests

November 10, 2016

A recent On the Case story, “In Biggest Cases, Class Action Lawyers are Low-Balling Fee Requests,” by Allison Frankel reports on recent fee request and fee awards in class action cases.  The article reads:

U.S. District Judge Carl Barbier of New Orleans ruled last week that the plaintiffs' lawyers who led the Deepwater Horizon oil spill litigation against BP are entitled to about $555 million in fees and about $45 million in costs for their work on what the judge calls the biggest class action settlement in U.S. history.  The $555 million common benefit award will be presumably be shared by the 93 lawyers who signed the fee application last July.

As a raw number, $555 million is an awful lot of money, even divided 93 ways.  But in relative terms, not so much.  Judge Barbier, citing an affidavit in support of the fee request from Vanderbilt law professor Brian Fitzpatrick, put the total value of the two big BP class settlements for economic damages and medical exposure at about $13 billion.  So attorneys' fees, by Judge Barbier's calculations, are only 4.3 percent of the class recovery.

That percentage is less than the fee allocation in all but two "super-mega-fund" settlements, which is Fitzpatrick's coinage for class action settlements of $1 billion or more.  According to the Vanderbilt prof, there have been 21 class action settlements of more than a billion dollars in U.S. history.   The average fee award in these class actions is 9.92 percent of the class recovery; the median is 7.4 percent.  It's worth noting, as Fitzpatrick does in his affidavit, that in one of the two super-mega cases in which plaintiffs' lawyers were awarded a lower percentage than the lawyers in BP, Milberg Weiss was class counsel - and was, at the time, facing criminal charges (unrelated to the case).

Judge Barbier also did a lodestar cross-check to make sure the $555 million fee award wasn't out of line with the actual work BP lawyers performed.  Plaintiffs' lawyers performed 527,081 hours of legal work for the benefit of the two BP classes. (That's distinct from the hours lawyers worked for their own individual clients.)  Partners put in 268,297 hours; associates, 180,302 hours; and non-lawyer professionals, 78,482 hours.  The judge said $450 per hour was a reasonable blended billing rate, based on a National Law Journal survey from 2014, among other considerations.  Class counsel's lodestar fees, he found, were about $237.2 million, so $555 million represented a lodestar multiplier of about 2.34.

That figure, too, is below the average in super-mega-fund litigation.  In the 18 cases in which lodestar information was available, according to Fitzpatrick, the average multiplier was 3.14 and the median was 2.80.

There's another crucial fact you need to know to evaluate the BP fee request: BP agreed to it.  In the BP case, as in almost-as-gargantuan VW clean diesel class action, plaintiffs' lawyers negotiated fee deals with defendants after and apart from reaching a settlement for class members.  Class counsel argue that separating fee negotiations from the class settlement resolves conflicts and keeps more money in the pockets of class members because the defendant, rather than the class, pays plaintiffs lawyers' fees.

Some class action critics claim class members don't really benefit from these post-settlement fee deals because defendants factor anticipated class counsel fees into their settlement strategy.  But at the very least, ex post facto fee agreements have good odds of approval from trial judges as long as they are derived from arms-length negotiations.

We don't know yet what fee award class counsel will request in the VW clean diesel litigation, in which the benefits for class members are worth about $10 million.  Lead counsel in the VW case, Elizabeth Cabraser of Lieff Cabraser Heimann & Bernstein, is due to file a fee request for the plaintiffs steering committee next Tuesday.  We do know from a previous filing, however, that the request will not exceed $332.5 million in fees and costs.  Reuters reported in October that Volkswagen has consented to pay $175 million.

Even the higher number represents less than 3 percent of the benefits for VW car owners and lessees, which means the lawyers who led the case will receive a historically tiny percentage of the recovery.  (That's not counting whatever plaintiffs end up paying their individual lawyers.)  I'm guessing the lodestar multiplier in the VW case will be much higher than in BP, since VW settled in a matter of months and BP dragged on for years, including bellwether trials and 90 trips to the 5th U.S. Circuit Court of Appeals, according to Judge Barbier.

Regardless, leading plaintiffs' lawyers in the BP and VW cases - apparently the two biggest-ever class action settlements - seems to be operating with a clear strategy of modesty.  One school of thought among plaintiffs' lawyers is to assert aggressive fee requests because you're not going to get money you don't ask for.  That approach accounts for the almost daily headlines you see about trial judges slashing fees awarded to class action lawyers.

Indignant judges make for good copy, but as a matter of public policy, the class action system suffers when plaintiffs' lawyers seem greedy - even more so when they seem greedy at the expense of class members, who are their nominal clients.

The BP and VW lawyers seem to be thinking further ahead than plaintiffs' lawyers looking to score big from a single settlement.  For repeat mass litigation players, it's simply good business to request fee awards that emphasize the economies of scale that are supposed to be promoted by class actions.

Professors like Fitzpatrick sometimes argue that judges disincentivize plaintiffs' lawyers by awarding smaller percentage awards in super-mega fund cases, sending the message that class counsel won't be rewarded for obtaining the most possible money for class members.  That's a fine theory, but the lawyers in the BP and VW cases seem to prefer preserving the system - admittedly, a system that rewards them pretty lavishly - to squeezing out every possible dollar from their cases.