In-house counsel have railed against escalating legal fees, claiming that firms do not care about clients having to pay hugely inflated rates.
Average partner hourly rates at magic circle firms have risen by 67 per cent, from £375 to £625 during the past four years, with the cost for specialist tax or regulatory advice coming in at around £700 per hour. At national firms partner rates have spiralled by 89 per cent, from £185 to £350 an hour, according to a study carried out by Legal Budgets in conjunction with The Lawyer.
The senior counsel at one FTSE100 company said: “The magic circle’s been so busy with M&A that they can charge £650-£700. If you don’t pay it they don’t care, because someone else will.”
Newly qualified associates at the magic circle charge £235 an hour compared with £175 four years ago, and hourly rates for five year-PQE associates have risen by 53 per cent, from £245 to £375.
“At the lower end you notice it: it’s one thing paying for specialist tax advice, but £200 an hour for someone to do filing hurts,” added the counsel.
For John Kitching, general counsel at HgCapital, the increases have highlighted the need for in-house counsel to project manage everything they do and focus the questions they need advice on before turning to external advisers.”I find it amazing that firms can increase hourly rates so much more than inflation,” he said.
However, George Scott, legal counsel for Scottish Re, said he believes partners do offer good value for money.
“I’d prefer to pay £650 for an hour of quality, honed advice from a partner than pay for three hours with an associate who’s on £350 and isn’t clear on the issues,” said Scott. “You get what you pay for.”