My Shingle

Another large firm lawyer goes solo – and it’s all about the [lower] rates

by Carolyn Elefant on March 16, 2007 · 2 comments

in Biglaw to Solo, Law Firm Announcement, Setting and Collecting Fees, Solo Practice Trends

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One of the unintended consquences of the expansion of large law firms is that this trend may drive more lawyers to start their own firms. Think about it – though large firms hope that increased size will foster economies of scale and result in savings, there’s still a whole lot of overhead involved in running a big firm. So to increase profits, firms will cut non-producing partners from the ranks and raise hourly rates.

So what’s a lawyer to do when his clients can no longer afford him? Most of the conventional wisdom that I see here on the web would counsel lawyers in this position to cut clients who can’t pay and raise rates even more as proof of value. Fortunately, most lawyers, myself included, don’t buy that logic; we realize that there’s a market out there for rates that are lower than market but nonetheless substantial enough to make big profits. And that seems to have been the motivation for Simon Bloom, a former attorney at Biglaw firm Powell Goldstein, who just put up a shingle, according to this article, Powell Goldstein Lawyer Steps Out to Open His Own Firm (3/15/07).

Listen to what Goldstein had to say:

“It’s always been a dream of mine to go out on my own and offer my services to a wider market,” said Bloom, 35, of his decision to open his own firm. He had practiced at Powell Goldstein since 1997. He explained that big-firm rates were pricing him out of what he sees as a “huge middle market.”
He said that at Powell Goldstein he billed clients $385 an hour, adding that his rate there was about to increase to $405 an hour. “Only the Fortune 1000 could afford my rates — and there are only so many of those clients to go around that have real estate issues,” he said. His new rate is $295. “If you want a Powell Goldstein-quality trial lawyer, you’re not going to get a better deal,” he said.

My thoughts exactly.

  • http://www.donnerlawfirm.com Jeff Donner

    Exactly.
    My rate at Holland & Knight (Miami office) way back in 2003 (when I was just four years out of law school) was $250. That was before the latest round of huge Biglaw increases in salaries and billing rates. Had I stayed at H & K, my rate today would be around $315 or so, I’m guessing.
    Today, as an independent practitioner with 8 years of experience, my standard rate is the same $250 that Biglaw is charging for 2nd-year-lawyers. My clients get Biglaw-junior-partner work for Biglaw-junior-associate prices. Everybody wins.

  • http://prosethoughts.globalide.com ProSeThoughts

    WOW! All I can say is WOW! Now I understand why law firms turned down my case and said it’s too complex and I don’t have enough money. I had no idea how much law firms charged. I guess I’ll be a pro se litigant through all three of my cases. :-(
    No wonder small businesses back down in Defense contracts. The large companies can afford lawyers, lobbyists, politicians and judges. I have seen all that in my cases up against six lawyers, JAG, Air Force, large corporations and high-profile defendants (at least for our city).
    I’m shocked at the hourly rates. It’s also no wonder Americans can’t “buy” justice.

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