Legal Marketing & PR

Has BigLaw Gone Completely Nuts?!!

By Tom Kane

With the latest round of dollars being thrown at associates, there just may be some in-house counsel in major corporations who will think that large law firms have crossed the line – certainly for some corporate work that doesn’t require the “top” law firms to begin with. Accordingly, there is a VERY good chance that small to mid-size law firms, with their more reasonable pay grades and hourly rates, will pick up more of that corporate work, if they play their legal marketing cards smartly.

Why, you say? 

We know that corporate America is sensitive to legal costs, and general counsels are increasingly coming under pressure to lower their legal bills. First, we have salaries for some first years raised to $160,000. Then, we hear about the billable hour rate for some lawyers topping $1,000 per hour. Now, we have several firms that have announced (not one but two) bonuses for associates as the year comes to a close. Apparently, they are making just scads of money. Ya think?

Recently, Cravath, Swaine & Moore announced “two bonuses totaling $45,000 for first years, and going up to $110,000 for senior associates,” (emphasis mine) according to a New York Lawyer article. (free registration required). This was after Clifford Chance announced a “one-time bonus (we’ll see about that) of $10,000 to $50,000 and a year-end bonus of $30,000 to $65,000,” according to the same article. Others following suit include Shearman & Sterling, Fried Frank, Cleary Gottlieb, and Simpson Thacher. That certainly isn’t the end of it, as others are sure to jump on board.

That is precisely why this latest example of BigLaw excess won’t sit well with many general counsel. And, it certainly won’t help the latter’s position with his/her CEO and their board. Further, we know that 38% of in-house counsel think law firms make too much money, and some 58%  are “outraged” over the latest increase in first year salaries, according to a Altman Weil survey. It’s as if law firms at this level are oblivious to what their clients think, and are more concerned about a competitor outdoing them when it comes to paying associates.

Therein lays the opening for smaller firms that get their marketing and business development act together. It is an absolute certainty, if we believe what in-house counsels are telling us, that opportunities abound for smart, qualified, and less expensive law firms to pick up more of large corporations’ work.

Full post as published by Legal Marketing Blog on November 13, 2007 (boomark / email).