Well, maybe not in all cases. Such hourly fees are not out of the question, if it is a “bet the company” type matter. In such high risk cases, corporations will gladly pay that rate for the appropriate expertise.
This is the position of Mike Dillon, the blogging general counsel of Sun Microsystems, Inc., over at The Legal Thing where he tells us “Context is Everything.” Basically, he reinforces the idea that if the risks are great enough, clients will pay that and more.
When many general counsel are upset (actually, 58% are “outraged” according to a recent Altman Weil survey) over the recent increase to $160,000 in first years’ salaries at some firms, it is no surprise to many that billable rates will have to increase. In fact, Simpson Thatcher, the first firm to raise first year salaries to that level, is the first to go to a grand per hour, according to the New York Lawyer (free registration required). Not all rates will be raised to $1,000 per hour, of course, for all partners even at Simpson. Moreover, as Mike puts it: “The reality is that most companies will rarely, if ever, require these types of legal services.”
But, be assured that rates will go up in many more large firms. And therein lies the opportunity for smaller firms that don’t have the overhead that requires those kinds of fees. As mentioned before, lawyers in smaller firms with the appropriate expertise can compete with their counterparts in larger firms.
Further, with business development avenues now more readily available to smaller firms, thanks to the Internet, the chances of their talents being discovered by larger companies and competing with Biglaw becomes a whole lot easier.