Thank you for sharing!

Your article was successfully shared with the contacts you provided.
San Francisco�Fenwick & West is wasting no time cashing in on the possibility of an economic recovery in California’s Silicon Valley. After two years of holding billable hour rates for partners steady, Mountain View, Calif.’s Fenwick announced to clients last week that it is raising its rates by 10%. Fenwick’s decision illustrates a growing optimism among Silicon Valley law firms that a steady increase in corporate work during autumn means the economy may be on the rebound. Fenwick’s management, at least, seems to believe that in-house lawyers who have been trying to slash legal spending during the downturn may be willing to absorb larger legal bills. ‘Sign of bullishness’ “It’s a sign of bullishness that the economy is coming back,” said Peter Zeughauser, a partner with law firm consultant Zeughauser Group. Fenwick may get some company in raising rates. Law firms typically review their billing rates at the end of the year and raise them in January in anticipation of rising expenses. Managers at several San Francisco Bay Area law firms say they continued to review rate hikes even during the downturn. In a letter to clients, Fenwick partners said their billing rates beginning on Jan. 1 will range from $400 to $700 an hour and hourly fees for associates will range from $190 to $400 per hour. Those fee ranges represent a 10% increase in partner rates and a more modest increase for associates, the letter said. Zeughauser said the move could also mean that Fenwick needs the money and is boosting fees to increase profitability to help counter the slowdown in corporate work. “The additional incremental dollars go right to the bottom line,” Zeughauser said. “This is all profit and that helps a lot.” Fenwick’s revenue and profits soared during the boom, and the firm’s gross peaked in 2000 when it logged $148 million. Profits per equity partner that year were $800,000. By 2002, the firm’s revenue had slipped to $142 million, and profits per partner dropped 19% to $650,000. Fenwick had held most partner fees at 2002 levels and associate rates at 2001 levels, according to the letter to clients. After comparing the firm’s billing rates with competitors, firm managers decided Fenwick wasn’t charging enough, the letter said. “As a result, we have reluctantly concluded that increases in our rates are necessary in order to continue to attract and retain the best talent while maintaining our commitment to providing value to our clients commensurate with the fees charged,” said one partner’s letter to a client. Gordon Davidson, Fenwick’s chairman, said the firm did not keep pace with rate increases made by its competitors. “Recognizing the economic downturn among our clients, we determined to hold our rates flat to be a good business partner,” Davidson said. “We reviewed independent, third-party surveys and learned our rates, which had been held flat for two or three years, were significantly below the Silicon Valley and San Francisco firms,” Davidson said, “and even further behind the New York, Los Angeles and Chicago firms which have offices in Silicon Valley.” Fenwick not alone Fenwick is not alone among firms considering rate increases. Pillsbury Winthrop is currently conducting its annual survey of partner and associate rates and any changes to their practices over the last year. Marina Park, Pillsbury’s managing partner, said that, rather than instituting across-the-board rate increases, the firm considers the experience level of each lawyer, particularly the partners, and where they’re practicing. “We have to be sensitive if there’s a downturn in a particular area of the country,” Park said. “That’s something we’re very cognizant of for the coming year.” The firm doesn’t set limits on how much fees may go up, however. Park said some partner fees could go up by 10% or more while others could remain unchanged. The new fees put Fenwick’s partner rates just below the fees charged by bigger players, like Latham & Watkins and New York-based Skadden, Arps, Slate, Meagher & Flom, according to data compiled by The National Law Journal. [NLJ, Dec. 1.] Skadden partners command hourly rates ranging from $495 to $725, and Latham’s partners pull down $450 to $725 per hour, according to the data culled from law firm surveys and public records.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.