The top hourly rate paid for an attorney just hit a wall.
And, this market-topping rate is exposing a few cracks in the wall, if not the very foundation itself. Clients identify $2,000 as the top rate they pay for outside counsel—identical to 2016. This means the 8% annual growth for the top rate paid for the last 10 years is over.*
Not Meeting Clients’ Heady Highest Rate Expectations
First, the bad news—the inability to deliver at the top rates isn’t just a client disappointment—it’s a deal breaker. There is only one reason clients say these otherwise excellent attorneys aren’t worth it—they don’t meet clients’ lofty expectations. Top legal decision makers tell us:
“At this rate I expect my attorney to walk on water, not get their feet wet, and be thinking only about me while they do it. I only needed to hear ‘you’re next on my list’ once and I knew it was over,” says one CLO at a large global consumer products company.
“I expect this attorney to be thinking about things I haven’t ever thought of and bring the strategies to deal with them before I bring it up,” says another top-level client.
“This attorney is excellent but is a step or 2 from amazing. So we will be parting ways when this is over,” indicates a top legal decision maker at a large financial institution, with some level of resignation in his voice.
When You Are Worth More Than the Top of the Market
But, there is some good news—just about half of the clients paying these top rates think this hourly fee is worthwhile. The half who report receiving the highest value at the highest rates talk about 4 key attributes:
- Total command of the situation—a deep and penetrating understanding of goals and what needs to be done to get there
- The top rate earner is backed by a team where every single person is equally impressive—not a weak link to be seen or heard
- Seemingly never having to ask questions—attorneys at the top end of the market always look ahead, make sure their clients are in the know, and are 2 steps ahead of client questions
- Timely invoices with updates and explanations of what it’s for and what the next invoice might look like
In the words of a top executive at a global pharmaceutical company, “Our lead attorney has such command of our complicated deal, but he was backed by one of the most impressive collaborative teams. I felt the top rate was worth it to have this team working on this deal. The cost of the top attorney was low despite the high rate.”
Or this description from a CLO at a Fortune 100 company: “This was high stakes, very high. I had updates every morning and he always kept me in a position to field calls from my CEO. You just knew he knew what was needed when and it all just went so smoothly.”
Top Rates Change the Client Expectation Game
Clients always have high expectations, but the rules of the game change at the super-premium end of the market. Clients ratchet what they expect to new unseen heights, and meeting these ever-increasing expectations may be the hardest part of delivering value.
There is no turning back. If you don’t deliver on client expectations at the top of the market—reasonable or not—the relationship is likely toast. But, the most client-savvy attorneys in the world know how to manage client expectations, however high and unreasonable, and end up with the top rates, top value, and the top clients.
*Based on in-depth BTI research conducted on a rolling basis between February 2016 and April 2017. BTI conducted more than 340 independent, individual interviews with CLOs and General Counsel at Fortune 1000 companies and large organizations.