Negotiating w/ Your Law Firms

July 3, 2023

What the 2022 Data Tell Us about Spiraling Law Firm Fees: A Disconcerting, But Direct, Inference (Part II of II)

by Joel A. Webber

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The Point

When should your business pay the exorbitant prices of a major law firm?

When you need the full attention of the best attorney available for the task presented.

But something else is happening.

The data say that in 2022 corporate clients were paying proportionately more for the total hours of junior lawyers, and getting less attention from their most proficient, experienced colleagues.

How did that happen? The data indicate that law firms “mitigated individual attorney rate increases by adjusting staff mix.” What does that even mean? Apparently it means the appearance of cost control on law firm charges by making less use of higher capability (higher priced) partners, while making more use of lower capability (lower priced) associates. Continue reading

February 22, 2023

“Swept Up in ‘Awe,’ Legal Departments Fail to Push Back on Rates at Biggest Law Firms”

by Joel A. Webber

The Point

The above from a headline in Corporate Counsel (subscription required) last week.

Nathan Cemenska is an attorney who is Director of Legal Operation and Industry Insights at Wolters Kluwer ELM solutions. In a report issued earlier this month, LegalVIEW Insights volume 2023-1: Law firm rate increases, he contends that intimidation confines corporate Legal’s negotiation efforts to “where it matters least”:

“In smaller, less expensive firms where both rate increases and the underlying rate tend to be lower, limiting opportunities for savings …

“As long as corporate law departments continue to stand in awe of their largest firms and steer away from the application of any serious pressure to rates at the biggest firms, hourly rates at those firms will compound year over year and become outrageous by any definition.” Continue reading

September 30, 2022

Be an Informed Client of Your Company’s Law Firms: Signs of Softening Demand Should Inform Negotiations with Outside Counsel

by Joel A. Webber

The Point

Demand for large law firm services, after recovery from 2020’s Covid-induced setbacks to the economy, led to eye-popping rate rises in 2021, and record revenues for the firms.

Whatever market forces caused those rate increases and record revenues, they look like they may well be on the wane in Q42022. Large law firms’ recent, verifiable behavior reflects this.

Client companies should not hesitate to negotiate robustly with their law firms on rates. Beyond that, they should negotiate alternative fee arrangements based on mutually agreed value determined in advance of the work performed — not based on attorneys’ hours. Continue reading