Legal News

No Joke: Top-Firm Partner Rates Falling Fast, at Least in the UK

By Ashby Jones

So, here’s the way the global recession seems to be playing out at big law firms, at least in the UK: The priciest law firms, in the hunt for more work, are going downmarket. They’re increasingly competing with lower-priced outfits to get lower-margin work.

The result of this: rates of partners at the so-called “magic circle” firms are falling fast, according to the Lawyer’s annual hourly rates survey.

According to the survey, in the last 12 months average magic circle partner rates have dropped by a third, from £680 an hour ($1100) to £450 ($725). If the drop hasn’t yet brought the U.K.’s top legal eagles into your price range, sit tight. "There's a trend towards continued discounting - the supply side currently exceeds the demand," says Freshfields Bruckhaus Deringer London corporate head Mark Rawlinson.

We’re not sure if there’s a comparable phenomenon unfurling over on this side of the pond, but we’d be surprised if there weren’t.

Simmons & Simmons managing partner Mark Dawkins said: "In a recession, the leading firms wake up to the fact that they need to keep their previous market share and keep their high number of lawyers busy. They start lowballing or doing some pretty cut-throat pricing."

And in turn, lower-priced lawyers are going even lawyer, to further differentiate themselves from the most elite firms. Diamond said: "Gone are the days when a mid-rank firm can justify its rates on the basis that the magic circle's are 50 per cent more."

That said, headline rates for the most high-profile instructions have continued to soar. It is understood that top insolvency partners can earn up to £900 an hour.

A magic circle partner said: "It would be wrong to say there's a bloodbath on fees across the board. The strategic or distressed transactions are less sensitive in terms of rates."

Full post as published by Law Blog - WSJ.com on September 21, 2009 (boomark / email).