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Survey: Hourly Rates for Top M&A Lawyers Climb

June 6, 2016 | Posted in : Fee Data / Fee Analytics, Fee Scholarship, Hourly Rate Survey, Hourly Rates, Study / Report

A recent American Lawyer story, “Report Sees Top Deal Lawyers Pull Ahead as Billing Rates Soar,” reports that, the high and low ends of the M&A legal services market are becoming ever more stratified as billing rates for deal work dwarf other practices, according to a new survey by legal billing processing and analytics company LexisNexis CounselLink.

Lawyers who already command the highest rates clocked the fastest growth in billing rates last year, according to CounselLink’s examination of roughly $21 billion in invoices related to more than 1 million matters since 2009.  The fees were paid by a wide variety of companies in different sectors.  A quarter of the companies had annual revenues over $10 billion.  Forty percent gross $1 billion to $10 billion annually, and the rest took in less than $1 billion a year.

Every way CounselLink researchers crunched the numbers, M&A lawyers outperformed the rest.  And in the rarefied rates of M&A advisory work, New York lawyers came out on top.

Overall, M&A lawyers were able to push their hourly rates higher more quickly than those commanding middling rates, according to the survey.  For example, in 2015 a lawyer in the 90th percentile in the M&A area billed $1,032 per hour, up 14 percent from $903 per hour in 2012, the data showed.  But partners billing at the median rate only saw rates rise 2.4 percent during the same period, to $638 from $623 an hour.

“The lawyers increasing their rates the most are those who are already the most experienced,” said CounselLink strategic consulting director Kris Satkunas, who oversaw the study.

The same was true for associate billing, with associates already billing higher rates increasing their rates significantly faster than those with middling rates.

Roughly double the fees were paid out for M&A work in 2014 and 2015 compared with 2012, the report found.  The surge in billings, however, mainly benefited the largest firms: Almost three-quarters of the M&A-generated fees went to firms with more than 500 lawyers, the data show.

Satkunas provided some additional information on New York M&A rates, historically among the highest nationally.  CounselLink's data show that New York partners’ rates outperformed partners across the country.  New York rates for partners at the 90th percentile level surged to $1,210, up from $997 in 2012—21 percent higher than three years ago.

“That’s consistent with what we’ve seen more broadly, that the most experienced partners have had the greatest increases, but the numbers are higher in the New York market,” Satkunas added.

Though the study doesn’t routinely track the highest rates billed or paid out, Satkunas said the highest rate recorded by CounselLink study was $1,445.  That’s significantly lower than the numbers cited earlier this month in another study, which found about a dozen firms with rates topping out at $2,000.

The survey also found that partners who don’t specialize in M&A work billed at far lower rates than their deal-lawyer counterparts.  Median partner rates in labor and employment, for example, were $392 an hour last year, while real estate partners commanded a median rate of $375 an hour, with rates growing at around 2.5 percent last year from a year earlier.

Just below M&A work in hourly rates were general corporate and tax partners and regulatory and compliance partners, with a median rate of $562 an hour and $560 an hour, respectively.  Those areas showed the highest sustained growth rates of a dozen practice groups’ billings that were analyzed in the report, averaging at or above 4 percent growth each year over the past three years.