What $1000 an Hour Gets You Today in Big Bankruptcy
March 31, 2023
A recent Law.com story by Dan Roe, “What $1,000 an Hour Gets You in the Am Law Today,” reports that, inflation be damned, $1,000 is still a lot of money. In exchange for $1,000, you can have a smokeless fire pit, an eight-person inflatable swimming pool or a drone quadcopter, according to thingsineedtobuy.com.
Last week, Legal Twitter users scoffed at the revelation that they could instead spend about $1,000 on one hour of lawyering performed by a second-year associate at Kirkland & Ellis, per a recent fee application in the bankruptcy of Voyager Digital Holdings surfaced by ex-Greenberg Traurig lawyer Robert Freund of Robert Freund Law.
The second-year in question turned out to be a fourth-year who was admitted elsewhere previously, but Freund’s tweet sparked a dialogue about the pace of Big Law rate hikes in recent years. Even considering inflation, senior associates only began surpassing the $1,000-per-hour mark a few years ago, while partners have topped the $1,000 mark since the mid-2000s.
Nowadays, there may not be a second-year billing at $1,000 per hour—but Paul, Weiss, Rifkind, Wharton & Garrison comes close at $995 per hour. That’s according to an American Lawyer review of bankruptcy fee requests from 10 firms in the Am Law 200, which included fees requested in the past six months for associates and partners with rates closest to $1,000 per hour.
Sullivan & Cromwell charged a similar rate of $960 an hour for second-year associates in its most recent fee application in the FTX bankruptcy. Bankruptcy giants Kirkland, Latham & Watkins, and Weil, Gotshal & Manges offered more experience for roughly $1,000, charging that amount for associates with between three and five years of experience.
Getting out of the Am Law 50 gets you a junior partner at Katten Muchin Rosenman, but the Second Hundred is where a $1,000/hour lawyer’s years of experience reliably hit the double digits. At 180-lawyer Cole Schotz, where profits per equity partner exceed $1 million, a 19-year partner recently billed at $950 per hour in the bankruptcy of Armstrong Flooring. Equity shareholders at Jackson Walker, a frequent local counsel to Kirkland & Ellis in the Southern District of Texas, bill at a blended rate of $950.
However, the fast-approaching $1,000-an-hour first-year associate (conspicuously absent from the aforementioned e-commerce site) may not draw as much ire from clients as some observers would posit. For starters, many clients decline to pay for first-years in general, said Laura Johnson, legal operations manager of Sterling Analytics, who helps legal departments draft billing guidelines for outside counsel. And among the most elite firms, billing rates are of little consequence when the stakes are high. Instead, billing analysts like Johnson instruct clients to concentrate on staffing, an area where firms can more easily rack up huge bills.
“If you’re hiring a top-tier firm you know you’re going to be charged really high rates,” Johnson said. “We tell our clients to focus on staffing and how they’re billing for the task they’re performing—if a simple matter should take one partner and one associate and all of the sudden there are three partners and four associates, that’s what we’d focus on more than the rate.”