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NLJ Billing Survey: Hourly Rates on the Rise

January 5, 2015 | Posted in : Bankruptcy Fees / Expenses, Fee Data / Fee Analytics, Hourly Rate Survey, Hourly Rates

A recent NLJ story, “Billing Rates Rise, Discounts Abound,” reports that, according to a recent NLJ billing survey, the price of hourly rates has risen by more than 10 percent in four years, as large corporate law firms focused on their most expensive work and saved clients’ money elsewhere.

“The question is: Is anybody paying that?” Maurice Watson, chairman at Husch Blackwell said, looking back at hourly rates charged last year for lawyers.  Husch’s average rate for partners is about $449 per hour, the firm told the National Law Journal in response to the 2014 billing survey.  But $407 is closer to what the firm collects for its work.  The former number represents the “rack rate,” Watson said, while the lower price factors in discounts given to clients on the billable hour and alternative billing arrangements.

Husch’s fees are indicative of the pricier hourly rates and complementary cost cuts that law firms find for clients.  The Kansas City, Mo.-founded firm was among the firms that have reported their rates to the National Law Journal since 2010.  Almost all of the highest- and lowest-charging partners among the firms increased rates since 2010.

Partners’ hourly prices at the 40 firms that reported their numbers in 2014 now hover around $500 an hour on average.  The highest-billing partner among the survey came from Kaye Scholer, with a $1,250 rate.  The lowest-billing partner, from Frost Brown Todd, made $220, the firms told NLJ.

The NLJ billing data also includes rates collected from public records—mostly bankruptcy filings—for 128 additional firms during the past three years.  Although the rates charged have gone up in recent years, the amounts that clients pay have not kept pace with inflation, legal industry leaders say.

Associates, on average, charge $306 an hour at 28 firms in the NLJ survey in 2014, an average of 12 percent from those firms’ average rate four years previously.  The most expensive associates’ rates pushed up at about the same pace, while a number of firms increased their lowest-paid associates’ rates by only $15 or less an hour.

The billling rate story was different in bankruptcy matters.  Those numbers showed that the practice are, which runs countercyclical to the U.S. economy, suffered as companies recovered from the economic recession.  Partners and associates working with clients in bankruptcy often must report their hourly rates in court.

Those partners average $452 per hour in 2014, compared with an average rate of $480 in 2012.  The NLJ found fewer partners mentioned in new bankruptcy filings in 2014 compared with the previous years.  On average over three years, bankruptcy partners charged about $475 an hour, according to records from more than 2,300 firm shareholders.

In 2012, when rates were higher, elite New York firms told courts their partners earned $1,000 an hour or more on the work.  This $1,000-an-hour club included partners from Paul, Weiss, Rifkind, Wharton & Garrison and two partners from Weil Gotshal.  It also included a team of nine Sullivan & Cromwell partners who charged $1,150 an hour each to represent Eastman Kodak Co. in its bankruptcy.

In 2014, the rates for bankruptcy work topped out at about $900 an hour, according to the data.  Two partners from Pachulski Stang Ziehl & Jones, a Los Angeles corporate restructing boutique, charged $875 and $895 each for their work on the bankruptcy of staffing company Ablest Inc.