$5,000/hr for a lawyer - why not?
While I’m not a friend of the hourly rate, I am realist enough to acknowledge that it is the standard approximation to “value” in law-law-land. Here’s what I don’t get: why are there no partners listing their hourly rate as $5k? Some are worth it.
At 1,500 truly “billable” hours per year (everything well above that approaches IMHO the territory of thievery), that partner would “make” or “bring in” $7.5 million. Sounds like a lot.
The question is value. Could that partner be worth $7.5 million? Heck, yes! Some are. Advising the board and management of a sizeable company on critical issues by delivering the legal angle wrapped in business savvy is worth that kind of money. It is the rarest of talents, skills and expertise. It’s one reason they pay the CEO’s the big bucks.
So, if you can get a lawyer who is truly a business person at the table (a peer to the directors and the executive team), then $7.5 million is a bargain. Because that lawyer is not employed, but only works when needed.
Of course, once we dig deeper, we see that those lawyers who could charge $5k, sort of do it by employing a boat full of partners and associates who work behind them on the matter that they got called to handle. Many of them are (inefficient) paper pushers and (mediocre) document readers. Their hourly value is maybe $100, but they charge $500 and up. And rack up 2,500 hours per year at that rate.
With legal tech such as Kira and Closing Folders starting to carve out that paper pusher work, both at the due diligence front end and the closing back end of a transaction, the pyramid scheme could be threatened for transactional lawyers worth $5k. Not now, not next year, but in 3 or 5 years.
Why not be honest to clients and charge $5k for the valuable one and $100 for the paper pushers. Yeah, I know what you might answer. But is that the right answer?
PS: By the way, if you were thinking of a male lawyer while reading the above, you may want to check your bias.