Rock-Star Law Firms Are Billing Up to $2,500 per Hour. Clients Are Indignant. – WSJ

Big companies around the world are pushing back against rapidly rising legal bills, railing against hourly lawyer rates they say are the product of law-firm excess.

Lawyers hourly rates rose almost 9% in the first half of 2024, according to data from Wells Fargo legal specialty group, which surveys large law firms quarterly. That s on top of an 8.3% increase in rates last year. Historically, fees would rise about 4% each year, Wells Fargo says. 

Lawyers pay is skyrocketing. Brutal poaching wars for talent are now common, and top lawyers expect to be paid like investment bankers and private-equity principals. 

You don t negotiate with those guys. You aren t going to bet the company, said Matthew Lepore, general counsel for chemical giant BASF. Clients aren t doing as well as the law firms are doing, and it s not sustainable.  

In certain specialties, such as merger counseling, regulatory compliance, tax and private equity, corporate general counsels say there is only a small pool of firms to choose from. Companies venturing into high-stakes deals turn to the most elite firms, with the hopes that the high price tag promises the best outcomes. Hourly rates can run $2,500 or more for the most sought-after attorneys, and are expected to keep rising, according to legal recruiters and court filings. 

The market is driven by the top end. The top firms are spending money to compete for the best rock-star talent. That s what is driving this, said Alan Tse, chief legal officer at global commercial real-estate firm JLL. Obviously not enough of us are saying no. Clients are part of the problem.

via www.wsj.com