Helped along by the slow economic recovery, South Florida law firms raised legal billing rates on a gradual upward curve this year.
Although some firms kept rates flat, a Daily Business Review survey of court filings listing lawyers’ hourly rates showed many firms whose specializations were in demand bumped up rates by $15 or $25 an hour for certain lawyers. Gone were the across-the-board percentage rate increases of years past.
The survey is a collection of rates charged by about 200 partners, associates and counsel at 31 South Florida law firms. It is not a comprehensive list because most firms do not release their attorneys’ rates.
A review of the billing documents showed more lawyers billed hourly this year in the $800s, $700s and $600s, but most firms bill partners at rates in the $400s and $500s.
The highest associate billing rates were found at Greenberg Traurig and Berger Singerman with associates billing as high as $430.
Greenberg has paraprofessionals billing as high as $235.
This year the survey did not find lawyers billing in the $900s. However, it’s well known that South Florida lawyers in some high-demand specializations bill hourly rates over $900. Bob Hudson, an international tax lawyer in Miami with Baker & McKenzie, had a billing rate of $925 a year ago. The firm declined comment this year.
South Florida firms have many different ways of passing on increased legal costs to customers. Some say they do annual reviews in January for all lawyers, some let lawyers do their own reviews, and some raise rates for lawyers who are promoted to senior associate or partner.
“We’re not increasing it much because we are not in an economy where our clients will accept much. They don’t like to see an increase in their legal rates,” said Byrd “Biff” Marshall, GrayRobinson’s president and managing director. He said the firm reviewed rates as it normally does in August and raised rates for selected lawyers up to 5 percent. Some rates were unchanged.
“That is our 2014 rate increase. Our partners are all over the board. We have partners from $250 to $750. We have a broad variety of rates depending on the client.”
He said the increases were often related to changes in an attorney’s status, where associates became partners or senior associates.
“Our hourly rates are generally less than the national firms and many of the firms our size, because we are only in the state of Florida with Florida clients.”
Plenty Of Competition
At Broad and Cassel, Miami managing partner Mark Raymond said the firm increased rates on a case-by-case basis in January by an average 4.5 percent to 5 percent.
“Every January we review rates, and we increase them. We have increased them for the eight or nine years that I have been doing them. Although we raised rates, we have not been able to raise rates to offset all the increases in the cost of running a law business, and I suspect that it probably true for most of our peers.”
Law firm consultant Joseph Altonji of Law Vision Group in Chicago said South Florida is not much different from the picture nationally where pressure from clients this year and the slow economy kept rate increases in check, while firms in high demand asked for modest increases.
“Overall this year we saw 2 to 3 percent actual rate increases. Some got more, and there are some whose actual pricing on average is slipping,” he said. “There are some firms whose best lawyers have pricing flexibility. But there are a lot of firms doing everyday work who cannot change prices much because there is plenty of competition and clients do not see that much difference between the firms.”
Weak demand is a factor.
“Something like two-thirds had a drop in their billable time in first half of this year compared to 2012. But they are not as bad as they were in 2009,” Altonji noted.
South Florida firms see real estate law picking up, bankruptcy has fallen off, and most of the legal business is driven by litigation and real estate, he said.
The survey showed Berger Singerman, working on the Rothstein Rosenfeldt Adler and other bankruptcy cases, leveled out rates by raising many of its attorney rates by $10 to $45 per hour.
“We review rates annually. We do it on a lawyer-by-lawyer basis. We don’t make blanket percentage rate increases. We consider the whole market conditions. There were increases for certain bankruptcy lawyers, thank God we’re in high demand,” Miami partner Paul Singerman said.
Akerman Senterfitt, also working on the Rothstein case, raised rates for some partners and not others. The survey showed most of its rates remained in the $400s and $500s.
Kluger Kaplan Silverman Katzen & Levine bumped up rates, as did Ver Ploeg & Lumpkin. Both also are working on the RRA law firm bankruptcy case. Genovese Joblove & Battista offered discounts on some rates and billed some lawyers at blended rates. For example, partner Glenn Moses offered a discounted rate of $435 in one case, and he billed at $495 and $475 in another case to produce a blended rate.
Former Miami-Dade Circuit Judge Herbert Stettin, the bankruptcy trustee in the Rothstein case, who works on a percentage of recoveries from the Ponzi scheme, said in a June 27 fee request that he expects to receive compensation totaling $5.5 million for his 3½ years of work in the case. Stettin said he reduced his compensation request by $1.5 million.
Some firms hired to represent parties in the Palm Beach Finance bankruptcy case in West Palm Beach raised rates. Meland Russin & Budwick in Miami bumped up some partners by $30 an hour. So did Miami-based Levine Kellogg Lehman Schneider & Grossman.
Ehrenstein Charbonneau Calderin in Miami raised hourly rates by $10 to $25 for different partners in one case.
The survey found other smaller firms like Rasco Klock Reininger Perez Esquenazi in Coral Gables, Rice Pugatch Robinson & Schiller in Fort Lauderdale and Shraiberg Ferrara & Landau in Boca Raton did not raise their rates — at least not in fees requests filed with the court.
Kozyak Tropin & Throckmorton charged $25 an hour more for some partners this year. Harley Tropin, a founding partner at the Coral Gables litigation boutique, said partners now bill rates of $450 to $750, and they will review rates soon for 2014. He said increases this year were “a few percent.”
“We don’t use cost of living. We review what we think is appropriate in the marketplace, what our competitors charge, the qualifications of our lawyers, their level of expertise, the level of demand for legal services in a particular area,” Tropin said. “We usually change some but not all the billing rates.”
Greenberg Traurig raised hourly rates as much as 16 percent for one West Palm Beach partner working in the 5-year-old bankruptcy of Tousa Inc., the Hollywood home-builder that fell victim to the real estate collapse.
But other partner rates increased by less or stayed flat. A few examples: Partners Elliot Scherker and Paul Berkowitz broke the $700 barrier and are billing hourly rates to Tousa of $725 this year, up from $685 and $670, respectively, last year. Partners Hilarie Bass, Kerri Barsh and Marlene Silverman all remained unchanged in the $600s.
In a statement, Greenberg Traurig co-president Hilarie Bass said clients, particularly in-house counsel, are offering more alternative fee arrangements. “More and more we find that value added/alternative fee arrangements are a ‘win-win’ for both clients and the firm, giving both parties greater certainty and control over costs and reducing the risk of any major billing surprises,” she said.
Altonji said alternative billing arrangements are growing in popularity and now represent 16 percent to 17 percent of the commercial work nationally.
He said alternative fees have “grown dramatically if you measure it over five years,” but most firms still think “going by the hour is good even if you give a discount.”
He said law firms will do flat fees if the clients ask, but “they will not try to make clients think it is a good idea.”
At Broad and Cassel, Raymond said about 80 percent of the firm’s work remains traditional hourly billing and the rest is flat fees, contingency or a reduced hourly rate with a contingency kicker, for example in litigation cases.
“The only way you can address the profit-margin squeeze is to have greater productivity and tighter cost control,” he said.