News Law firms Magic circle hourly rates drop by third as clients flex muscles By The Lawyer 20 September 2009 00:00 13 December 2015 18:19 Sign in or register to continue reading. It's FREE Sign in Email Password Keep me logged in Forgot your password? Not registered? It's FREE! Register now Register with The Lawyer Anonymous 21 September 2009 at 17:25 When one talks of hourly rates discounted down to “only” some £400 an hour i am reminded of a sale in a ( maybe ) cutting edge designer shop when the 40% reduced label still leaves you reeling for a stiff drink because the original price was so extortionate. What must Joe Public think? What must the local Conveyancing solicitor think? No wonder city lawyers only have Bankers and Estate Agents to talk to in the kitchen at parties ( mind you the conversation still starts off the same as it did years ago …” Do you know how much my house is worth according to our neighbours ?”). How are the fees justified other than in the most specialist areas and everyone knows, at the lower level of qualification , it is even worse. Paying over £200 an hour to have a NQ learn ” on the job” ( so to speak ) at the client’s expense ( literally ) and have his or her work checked by a partner – who also charges the client if they can – is obscene. How long can it go on? . In the meantime lawyers who earn 35% plus profit margins on normal charge out rates in the City can afford to buy in some work and keep their staff busy and it would be amazing if they did not do so. The real story though is the embarassing greed that seeks to jusify ” rack” rates in the first place. it is not the real world. Thank goodness. Reply Link Anonymous 21 September 2009 at 18:01 Its supply and demand. There is less work so amount you can charge goes down. If the top lawyers are in demand they can charge a premium. Its no different to any other market, there are plenty of buyers and sellers and far as i am aware there is no cartel operating to artificially regulate prices. Reply Link Anonymous 21 September 2009 at 20:19 This will have a knock-on effect. The silver circle firms will have to try and take work from those below them in the food chain. And somewhere further down the line, firms will start going under. Reply Link Anonymous 22 September 2009 at 00:51 As an associate at Slaughters who has worked at other firms, I can tell you their value-based billing is fantastic. Not having a billable hours target and not having to deal with any billing queries or having to justify time spent on a matter really frees you up to do your best work. Reply Link Carl Pressley 22 September 2009 at 08:33 Yes of course it is supply and demand. I am a consultant to the legal sector and when we are busy I obviously don’t need to offer a discount. Mind you, you get my 15 years of experience for approximately the same as a newly qualified lawyer!! Reply Link michael levy 22 September 2009 at 13:32 I get £45 ph from legal aid for defending murderers,rapists, and fat cat fraudulent lawyers. One mistake by me could result in imprisonment for life and/or confiscation of all the clients assets. What is worse Is that under BVT I will be expected to bid for a contract to be able to represent clients at police stations including late nights and weekends and word has it some firms will be bidding to do this work for FREE in the hope that they will get a court case out or two out of it. The poor client will not be able to choose his own solicitor to represent him. What price justice Reply Link Anonymous 22 September 2009 at 16:03 Cant see many firms going under to be honest. one or two. he others will merge or be bought. Reply Link Anonymous 23 September 2009 at 00:33 To the associate at Slaughters, I thought your firm’s profit margins were around 50%? If so, then either you or the client (most probably both) are paying a heavy price in some way. This is not a criticism – true value is about what clients are happy to pay for the service delivered and you seem happy enough. But I don’t think many other firms (if any in the UK) could operate the same model. Reply Link Anonymous 23 September 2009 at 11:30 What s Pinsents model like? Reply Link michael 23 September 2009 at 14:11 You also need to factor in the fall of sterling as well. For example it has fallen over 20% against the Aussie and Kiwi dollars. In Aussie dollar terms the third drop in charge-out rate is actually one half. Over the past year the pound has fallen against most other currencies as well. The depreciation of the pound makes Britain’s exports more competitive but it does so by making all Britons poorer – they just haven’t felt it yet. Reply Link Name Email Cancel reply Threaded commenting powered by interconnect/it code.