Low-balling fee arrangements reach unprofitable rates

A Legal Week/EJ Legal Big Question survey of 100 senior UK-based partners found rampant discounting, which the British refer to as “low-balling.” “In addition, more than two thirds of lawyers (67%) admitted to ‘sometimes’ doing work at unprofitable rates.” (Legal Week, Vol. 7, Sept. 22, 2005 at 4.)

I have heard the typical breakdown of associate billing rates as covering one-third compensation, one-third overhead, and one-third partner profit. If that split is approximately correct, then the discounts on associate rates – to reach an unprofitable level – would have to be on the order of 33 percent.

It troubles me not a whit if sometimes firms accommodate clients with steeply discounted services. There’s no Eleventh Commandment that decrees all law firms should always make money.

We welcome comments

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>