“Big Law” Rates under Pressure from Clients

Large law firms often charge hefty hourly rates, sometimes more than $1,000 an hour.  During the Great Recession, many clients negotiated discounts for their legal bills.  While firms have raised rates in the last few years, some clients have come to view the quoted hourly rate as simply a starting point for negotiation.  Established clients who retain law firms for expensive legal services are in an especially good position to demand discounts from regular hourly rates.

Discounted fees have eaten into law firms’ bottom lines.  According to Thomson Reuters Peer Monitor, large law firms in 2007 collected 92 cents for every dollar of standard time their lawyers worked.  That figure has dipped below 85 cents today.

Of course, companies are still willing to pay regular hourly fees when the survival of the company depends on the quality of the legal work.  But for more routine work, client demand for discounts appears to be the new normal except for perhaps a handful of elite law firms