Thanks to the economic crisis there’s not a single shop in London’s West End that isn’t having a sale at the moment. So it was only a matter of time before law firms would follow suit and cut their prices.
As we reported on Monday (21 September) magic circle partner chargeout rates have fallen to levels not seen in more than a decade as top firms muscle in on mid-market territory.
The annual hourly rates survey, carried out by costs lawyer Jim Diamond, reveals that the recession has resulted in magic circle partner rates to drop from £680 per hour to £450. Before the economic crisis, legal costs had been rising steadily for years, leading to criticism from in-house lawyers that they had reached an unsustainable level (read story).
But surprisingly, the survey also found that although partner rates have declined, firms haven’t offered similar reductions for newly-qualified (NQ) and associates lawyers. Magic circle NQ rates have remained steady at around £250 an hour for the last three years. In her leader columnThe Lawyer’s editor Catrin Griffiths question why? “After all, in the quest for value, it’s increasingly difficult to argue that an NQ - whatever their potential - can seriously provide something truly beneficial to the client in terms of experience or technical knowledge,” she writes. Perhaps this is something for you to discuss at your next interview!
On the deals front Slaughter and May has picked up a mandate to advise homebuilder Barratt Developments on its £720m rights issue. Herbert Smith, meanwhile, is acting for Credit Suisse and UBS, the joint sponsors, book-runners and placing agents (read story).
Slaughters has also secured a role alongside Linklaters and Norton Rose on the £900m share placing of a 44 per cent stake in tour operator Thomas Cook. The share placing was one of the largest to occur in the UK for several years (read story).
So a year on from the dramatic collapse of Lehman the deal pipeline is looking a little bit rosier even if they may prove less lucrative for some of the lawyers advising on them.