Cost per hour of high-level inside lawyers can exceed $280

The received wisdom puts a typical in-house lawyer in the $200 per hour range, with all costs to the company accounted for. That may be a representative figure, but what if we look more closely at a high-ranking lawyer (See my post of July 25, 2007 for some data on general counsel rates.). Assume that senior lawyer makes $250,000 in base salary, a cash bonus of $75,000 (30% of base) and also bears a benefits load of 30 percent. That lawyer’s total comp and benefits cost reaches $400,000. At a presumed 1,850 chargeable hours (See my post of Sept. 25, 2005 on 1,850 as a normal assumption for in-house chargeable hours.), each hour costs $216 dollars.

That lawyer also should be allocated some of the overhead of the department’s expenses. Say the lawyer is one of 50, where the inside budget is then $25 million ($500,000 per lawyer). Since that inside budget is something like 25 percent non-compensation expenses, then the lawyer’s full-boat costs should add in another quarter to the $400,000, another $100,000, which pushes the rate up $54 an hour (See my post of July 27, 2007 on fully-loaded costs.).

Finally, the lawyers in a department who are direct reports to the general counsel probably have administrative responsibilities, so assume we shave 50 hours off the chargeable-hours assumption. [I suspect that is too small a number.] Then the fully-loaded cost per hour of our hypothetical senior lawyer ($500,000 divided by 1800 hours) reaches $278 an hour.