How Client Rate Pressures Have Changed Rainmaking

Source: Law360

By Natalie Rodriguez, Law360

Twenty years ago, top lawyers — the rainmakers — could send a client a bill consisting of one line: "For services rendered," along with a dollar amount. They didn't worry that amount wouldn't be paid.

Now, when lead attorneys send out 50-page bills showing how work was done in five- or 10-minute increments, they know to carve out time for post-bill haggling over what will actually get paid, according to several experts.

This is just one way the practice of law has changed dramatically for rainmakers over the last two decades, and especially over the past few years. Lately, companies have put increased pressure on law firms to offer discounts and alternative fee arrangements, as highlighted by Microsoft Corp.'s July announcement that it hopes to shift 90 percent of its legal work to an alternative fee structure over the next two years.

In this climate, the attorneys bringing in and managing clients have had to evolve on a number of fronts, including how to handle billing, what tasks they log time on and how they staff cases.

"If you're only collecting $1 million on $2 million of billed hours, that's a disaster for a company, because $1 million of time has been wasted on uncollected fees," said Jeffrey Lowe, global practice leader of Major, Lindsey & Africa LLC's law firm practice group.

While Davis said these pressures push him to find lawyers who cost less than he does to do certain work for clients, some experts said the current pressures are actually exacerbating a trend of partners hoarding work.

If a rainmaker can do the work in two hours when it would take an associate four hours, it's ultimately cheaper for the client to pay their higher rate, according to experts. Plus, there are self-preservation matters to consider in keeping as much of the client business as possible.

"You often see this during tough times when hours are hard to come by, that's when partners will more typically hoard the work," Lowe said.

Read more of this article in Law360

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