Wal-Mart has demanded a freeze on across-the-board rate increases from its outside counsel, claiming that associate salary hikes have had an unacceptable impact on law firm billing rates.
A memo sent out last week by the retail giant to the relationship partners at its network of outside counsel said that while the salaries firms chose to pay junior associates were “none of its concern,” the company was worried by the impact pay hikes were having on charge-out rates.Associate general counsel Miguel Rivera said in the memo that the New York benchmark of $160,000 salary for newly qualified solicitors was being used as a measure by other firms in other cities.Rivera wrote: “Based on the size and frequency of the rate increase requests that we have seen in the past three years, it appears that many of the requested increases are largely attributable to the steady nationwide increase in junior associate salaries.”The retail giant �- which hires a large number of firms in the United States, including Hogan & Hartson and Greenberg Traurig �- said it would only consider individual requests for rate increases from top-performing lawyers working with Wal-Mart to meet the supermarket chain’s legal objectives.Wal-Mart demanded that all rate increase requests be submitted by Dec. 15 and that panel advisers provide it with hourly rates charged by every level of associate over the past three years.The move comes after Wal-Mart in 2005 issued a letter to its 100 panel firms asking for a range of diversity statistics, followed by a further request to nominate women and lawyers from ethnic minorities as relationship partners.Ellie Doohan, general counsel at Wal-Mart’s U.K. subsidiary Asda, said: “We are an everyday, low-cost retailer, and our suppliers need to deliver great value to us. We have a similar approach to Wal-Mart in that if our suppliers are looking to impose cost increases they need to give us a good reason.She added: “We have our own fee negotiations, and we challenge costs both at periodic reviews and on a case-by-case basis, but we don’t currently approach the issue in such a systematic way.”Wal-Mart declined to comment.
