Law partners are charging $2,000/hour and $1,000/hour for associates. Recent law school graduates with no experience are starting at $200,000/year. These figures are not from a novel about what the new Great Gatsby era might look like; they are real numbers in an article in the Oct. 5, 2024, edition of the Wall Street Journal about litigation managed by major law firms in the United States. Members of the litigation bar are aware of the rising hourly rate for major law firm partners; however, even experienced trial partners in the bar are somewhat shocked at the new rates. So are the clients, who continue to pay them.

An appropriate question is how this billing practice is affecting the bar, firm management committees, new law school graduates and potential clients. Take a step back and view the law profession from the position of middle America business owners, family members and new law school graduates.

An easy answer is that this billing practice only affects a very small portion of the bar who have clients who can pass the costs onto their corporate shareholders. But this large hourly rate movement has been expanding nationwide for several years, especially as the result of the many law firm mergers. The Wall Street Journal article cites a 9% legal fee rise in legal fee costs in the first half of 2024, compared to an 8, 3% last year. Some very experienced trial lawyers have confided that they are planning to leave their firms as they cannot charge the hourly rate required by the new procedures set by the firms after mergers. This is especially true with experienced criminal lawyers who are a mainstay of the bar. A great many clients are not corporations who can pass the costs to the shareholders.

Recently there has been a movement in the bar to bring more professional leadership training into the operation of law firms, such as training in management and client development skills, rather than promoting those persons who can bill the most hours. See Vaira, "Leadership Training for Lawyers Is Time Well Spent," Legal Intelligencer, March 6, 2023. This is a positive step in the right direction. My alma mater, Thomas R. Kline School of Law of Duquesne University, offers a full semester class in leadership, which is taught by persons from commercial business firms, the military and law firms. It is very popular with the students and has caught the attention of the bar. Large commercial corporations offer leadership training to their personnel in the field; however, very few law firms offer any leadership training. A good law firm management program can help control the billing rates of the firm.

Commentators of the legal profession have observed that some of the reasons for the rising rates are the client corporations who do not shop the market. The WSJ article cites Heineken general counsel who said, “You can get the same quality (of representation) for half the price.”

A new factor in this equation is the use of artificial intelligence (AI) in legal research by the law firms. A great deal of nuts-and-bolts legal work can be drastically reduced by the use of AI. How this is going to work out is going to be a study of technique and legal ethics. I predict that AI skills will become a legal specialty of certain firms.

A major factor that must be considered by law firms, clients, educators, and bar associations, is how this high priced hourly rate will affect new law graduates who must make a choice of what area of the law to pursue, in addition to considering how much of a salary they can obtain. Some niche disciplines, necessary for law practice of family law or small business administration, are not offered by many large law firms, as they do not require mass billing sessions.

There are no quick answers to the growing hourly rates for law firm partners and associates. The issue requires attention by law firm leadership, bar associations, educators, and the business community who pays the bills. I suggest the Philadelphia Bar Association create a “leadership committee” with members from law firms, in house counsel, educators and experienced trial lawyers.

Peter Vaira is a member of Weir LLP. He is a former U.S. attorney and the author of a book on Eastern District practice. He acts as special hearing master for Pennsylvania courts and clients. He can be reached at [email protected].