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Minimum Fee Requirements For New Clients?

Published by on February 15, 2011

According to a post at Law Department Management, DLA Piper — “soon to be the largest law firm in the world” — has distributed a draft strategic plan that calls for a minimum annual billing requirement for new clients.  More after the break. According to the post, the proposed U.S. minimum at DLA Piper for […]

According to a post at Law Department Management, DLA Piper — “soon to be the largest law firm in the world” — has distributed a draft strategic plan that calls for a minimum annual billing requirement for new clients.  More after the break.

According to the post, the proposed U.S. minimum at DLA Piper for new clients would be $200,000.  Apparently this strategy will continue to entrench annual increases in profits per partner at Big Law firms. 

The Wall Street Journal also reported recently on the pay gap widening between the “superstar” Big Law lawyers and the “ordinary” Big Law partners — a pay gap of 8 to 10 times what the “ordinary” partners are making.  The lead example in the story notes:

Washington litigator Jamie Wareham switched firms Monday, joining DLA Piper, where he will make about $5 million a year, a significant raise from his pay at Paul, Hastings, Janofsky & Walker LLP, where he was one of the highest-paid partners

How much work are we talking about here?  According to one author, “at DLA Piper and its reportedly lower profit margin (26 percent), Wareham will have to produce almost $20 million to support a $5 million share of firm profits. Again, at a blended hourly rate of $500, that means more than 40,000 hours.”

While this system may work for firms representing global giants such as Chevron (referenced in the WSJ article and fined $8.6 billion in an environmental case), it does not sound like this economic model is well suited for the service of most companies. 

What does the future hold?  Probably greater separation between Big Law billable rates, salaries and profits per partner and everyone else, and the creation of more boutique and mid-sized firms to handle the legal work of U.S. corporations at more reasonable rates.

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