Lawyers, Bankruptcy and the $950-Per-Hour Man

[dcfca]

<p>That’s some crazy pay.</p>

<p>From Dealbook-
The survey cites Stephen Fraidin of Kirkland & Ellis as having the highest rate among lawyers in its survey: $950 per hour. We would note that, unlike many of the lawyers in the survey, Mr. Fraidin is primarily a mergers and acquisitions lawyer, not a bankruptcy lawyer, which may explain his loftier fee. His clients have included General Motors, which he advised in its recent sale of a majority of General Motors Acceptance Corporation to a private equity consortium, and buyout veteran Theodore Forstmann.</p>

<p><a href=“Daily Report”>Daily Report;

<p>

Monday, June 19, 2006
He bills how much?
The $1,000-hour lawyer and other (mostly) urban legends.
By MARY SMITH JUDD, Special Sections Editor</p>

<p>ANOTHER HOUR, another $800.</p>

<p>No joke.</p>

<p>In addition to our annual look at who bills what in and around Atlanta, this year the Daily Report uncovered hundreds of hourly billing rates from big-name firms across the nation.</p>

<p>Our research was compiled mostly by poring through Chapter 11 bankruptcies filed last year in Georgia’s three district bankruptcy courts. Because the U.S. Bankruptcy Code requires that lawyers attest to their usual and customary hourly billing rates, we view the data as reliable.</p>

<p>On occasion, staff reporters also ran across rates in other courts, usually in fee disputes or high-profile family cases. Those are provided in this issue as well.</p>

<p>But airlines Delta and Northwest’s Sept. 14 filings for bankruptcy protection in New York’s Southern District provided us an unparalleled bonanza of out-of-state rates, including some from the first-, sixth-, seventh-, eighth- and ninth-richest firms in America.</p>

<p>The highest in our research was $950 for an hour of Kirkland & Ellis partner Stephen Fraidin’s time.
**
It’s not just the New York firms billing at these prices. Nine lawyers on our out-of-state list, practicing in Washington, Chicago, New York and London, billed between $810 and $895 an hour. Another 19—from those cities plus Los Angeles and Munich—billed between $710 and $795. And 34 out-of-staters billed between $600 and $700.**</p>

<p>This is where Atlanta jumps in. Well, four Atlanta lawyers on our list anyway (Alston & Bird’s Philip Cook, $645; Laura Thatcher, $625 and Terence Greene, $620; and Paul Hastings’ Scott Hobby, $610). The average rate charged by the 120 Atlanta partners we looked at was $387 an hour. That compares with an average $568 charged by the 170 out-of-state partners on our list.</p>

<p>The nine counsel on our local list averaged $334 an hour, compared with $474 an hour for those from the out-of-state list.</p>

<p>Atlanta associates averaged $243 an hour, compared with $352 an hour for the out-of-state firm lawyers.</p>

<p>Support—anything from a paralegal to a graphic specialist—likewise costs more outside of Atlanta. The local average was $125 an hour, compared with $153 out of state. An hour of time for the most expensive paralegal on our Atlanta list—King & Spalding’s Melissa Heinz at $205 an hour—compared favorably with $270 for a New York research specialist working for Kirkland & Ellis.</p>

<p>A couple of things to consider while you peruse the lists:</p>

<p>• In some cases, firms changed their rates mid-year. In the cases where we saw this, we went with the higher of the two.</p>

<p>• Some firms offer blended or discounted rates to their clients. It is not always apparent when this is the case, although a rate that does not end in a zero or a five is a likely candidate. (Example: Skadden.)</p>

<p>• Sometimes lawyers change positions, or even firms. It is not uncommon for last year’s associate to show up the next year as a partner. Remember, these are 2005 billing rates.</p>

<p>In this issue, we looked at more than 400 in-state and another 400-plus out-of-state rates. We uncovered so many lawyer rates compared with past years’ that we only took a passing glance at other financial consultants’ rates, some of which in 2004 dwarfed legal fees. That exercise showed us lawyers are billing at rates that are catching up with those charged by first-tier partners at big-four accounting firms.</p>

<p>Also in this issue, Monroe-based freelance writer Karen Dean revisits billing before the hourly rate took off, and our own anonymous Snark offers an insider’s perspective on why clients are willing to pay these rates.</p>

<p>To loyal readers who looked for this section a little earlier this year, we apologize.</p>

<p>We chose to produce our annual section a bit later than usual, in part, so we could harvest more rates, which in some cases were not available until firms sought their first quarterly payments.</p>

<p>We also took a peek ahead at the 2006 rates where available. Nothing earth-shattering—so far—but clearly, rates are continuing to climb here and elsewhere. Stay tuned.</p>

<p>Special Sections Editor Mary Smith Judd can be reached at <a href="mailto:mjudd@alm.com">mjudd@alm.com</a>.

</p>

[Shiboing_Boing]

<p>Wachtell (sp?) partners make 3.4 mil. Cravath partners make just under 2 million.</p>

<p>1000 dollars per hour times the 2000 hours billable per year is 2 million dollars.</p>

<p>So the numbers make sense; however considering how many lawyers, even from top schools, fail to make partner and the length of time and training it takes to become one of these lawyers, I wouldn’t hold my breath on becoming one.</p>

[Shiboing_Boing]

<p>Sorry, I mean Cravath partners make just under 3 million.</p>

[sallyawp]

<p>shiboing, that’s not exactly how it works. The partners at a given law firm are making money not only off of their own billables (and even then, I’m not aware of any situation in which they do directly collect their own billables), but also, and frequently mainly, off of the work being done by associates in that law firm (although partners in big firms will tell you that they make no money on an associate’s work until their third or fourth year).</p>