$2,500 an hour is not chump change. Even for corporations with the deepest of pockets. Yet, for some top-level attorneys, that rate is becoming common—and may rise more.

According to a report by the Wells Fargo Legal Specialty Group, hourly rates at law firms have risen some 9% for the first quarter of 2024, which is in addition to an 8.3% rise in 2023. The Wall Street Journal notes that rates have only risen historically by 4%.

“The market is driven by the top end. The top firms are spending money to compete for the best rock-star talent. That’s what is driving this,” Alan Tse, chief legal officer at JLL, told the Journal. “Obviously not enough of us are saying no. Clients are part of the problem.”

So what are clients looking to keep their legal costs in check?

"Companies have to do a better job of scrutinizing these increases and seeking alternatives, especially from large firms that are the most aggressive in raising rates," Richard Parr, general counsel of AEG Vision, told Law.com.

"Smaller clients are often forced to accept these rates or find alternatives, while the biggest clients are pushing back with tougher negotiations or by moving more work to smaller firms," adds Ken Callander, a principal at consultancy firm Value Strategies.

But Matthew Lepore, general counsel for BASF, pushes back on this idea of negotiating: “You don’t negotiate with those guys. You aren’t going to bet the company. …Clients aren’t doing as well as the law firms are doing, and it’s not sustainable.”

Salaries

It's not just billable rates that are climbing. The Journal breaks down how some lawyers at the very top end of the industry command salaries higher even than that of Wall Street bankers and consultants. The quote top salaries of $15-$20 million a year, while further down the ladder "many lawyers have seen their pay double in recent years. At the lower end of attorney pay, junior associates at large law firms can start at $250,000 a year. That’s about a 30% jump in five years from the starting salary of $190,000 in 2018."

Verdict

Not all case work requires the top attorneys at the top firms commanding the top rates. Alternatives exist. ALSPs like Lawtrades are full of highly-skilled lawyers and legal professionals ready to take on work at rates far more competitive.