Thursday, January 8, 2009
Recent Conversations
In recent conversations with several in-house counsel, most are (unsurprisingly) revealing that they are freezing rates paid to counsel in 2009. What's interesting is two-fold:
1. Many are not proactively notifying their outside counsel, but rather waiting to see if their outside counsel will actually raise rates in 2009, and notify them of the increase by a relatively (insensitive) generic letter, and
2. Budget for most companies for 2009 have long been set. Which begs the question: If companies finalize their budgets in the fall, why don't law firms communicate rate changes in a manner that matches their budget time frames?
1. Many are not proactively notifying their outside counsel, but rather waiting to see if their outside counsel will actually raise rates in 2009, and notify them of the increase by a relatively (insensitive) generic letter, and
2. Budget for most companies for 2009 have long been set. Which begs the question: If companies finalize their budgets in the fall, why don't law firms communicate rate changes in a manner that matches their budget time frames?
posted by Nat Slavin / 2:33 PM
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To point #2, issuing rate increases long after client budgets are set is another example of law firms acting in a law firm-centric rather than a client-centric manner. But I doubt they do so consciously. Most businesses operate in a vastly different accounting climate than law firms (accrual vs. cash) and it may simply not occur to law firms that other businesses don't wait until year end to count up revenues and costs and then implement changes for the coming year. In the corporate world, these decisions are often made by Q3 of the year prior. Expecting law firms to change the fundamentals of their accounting policy isn't reasonable, but it may be possible for law firms to rely on leading indicators (such as Q3/4 trends) to make key decisions like billing rates. We can only hope.
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