From Ms. Castañeda’s article:
Hourly rates have gone up because that is how you increase profits in a law firm, and what the business school graduates who run Big Law know how to do is to measure profits. Increasing profits is how they get paid big bonuses (a potentially unethical practice, according to the opinion).
There is only so much cost-cutting you can do to increase profits, and the hourly rates have to pay for the Big Titles of the ever-increasing non-lawyer management ranks. As a result, every lawyer needs to bill more hours at a higher rate each year for the firm to look profitable in the year-over-year metrics that the non-legal managers live by. They have trained the lawyers to live by them too. Et voila: sky-high billing rates that only the most profitable corporations can afford.
Seriously? The skyrocketing costs of legal services has nothing to do with partner profits and associate salaries? A quick scan of the original AmLaw 50 firms finds partner profits tripling or more (even when adjusted for inflation) at many of the firms. Associate starting salaries go far beyond their skill and knowledge level. But that isn’t the problem either; I’ll save that for another post when I don’t have a dune buggy to pick up for the day.
Let’s just take the easy out and blame the half-dozen “chief” whatevers at the firm. Their salaries are just breaking the bank and driving those $700-$1500 hourly rates.
For those subscribing to Ms. Castañeda’s opinions, my friend and professional services consultant Ben Greenzweig has a question for all of you:
What makes the practice of law so different, so special, so unique that it’s business model must be so fundamentally different than other professions including professional services?
Let me let you in on a little secret: in my role as the senior marketing professional in my firm I do exert influence, and sometimes control, over the BUSINESS of law, but never the PRACTICE of law.
This exertion comes in the form of conversation, guidance, the drafting of letters and RFP responses, coaching, etc. It comes from going over the numbers and making suggestions based on my knowledge, education, and experience. And while I am not obligated under the California Bar Association’s Rules of Professional Conduct, I am obligated under my employment contract with my firm to adhere to them nonetheless.
However, as much as I try, I cannot make a lawyer do anything they do not want to do. As a legal consultant once noted to me, “Lawyers pay a lot of money for good business advice they never take.”
Ms. Castañeda, I wish you well in your new career as a consultant to law firms, and look forward to seeing if your opinions have changed now that you have joined our ranks.