Legal Commentary

Are Discounted Hourly Rates The Answer?

By Patrick J. Lamb

The March 30 issue of National Law Journal contains an article, reprinted on Law.com, discussing how some inhouse lawyers are responding to the economic crisis by asking their firms to slash hourly rates.  The discounts discussed in General Counsel Pressuring Firms Amid Recession  are not quantified, but include references to "we'll match any qualified offer" and similar gimmicks.  Those inhouse lawyers seeking discounts to offset budget decreases of up to 35% of ignoring the fact that the hourly rate is only one component of the cost equation.  This point is effectively made in the article by Joel Henning of Hildrebrandt and Susan Hackett of ACC.  It's a point I've made before as well.

The articles does note that some customers are moving their work from large firms to smaller firms where the value offering is much higher.  This is a smart step, but it should not be the only step.  Lawyers at any firm want to make money, and if the hours are available, the numbers on that side of the equation will pile up.  The keys are efficiency and quality, two attributes never associated with the hourly rate model.

General Counsel faced with unprecedented budget cuts need to be more creative than simply seeking discounts or moving work to lower priced providers.  There are systemic solutions there to be had.

Full post as published by In Search of Perfect Client Service on April 07, 2009 (boomark / email).