$1,000 an hour for lawyers now commonplace
Some corporate firms hiking rates they charge business clients by up to 10 percent
Corporate law firms in Texas are hiking the hourly rates they charge business clients by as much as 10 percent for the most experienced attorneys, resulting in scores of lawyers now charging more than $1,000 an hour in the state.
Corporate law firms based in Texas are hiking the hourly rates they charge their business clients by as much as 10 percent for the most experienced attorneys whose legal specialties are in high demand.
As a result, scores of Texas lawyers now charge $1,000 or more per hour for their legal services. Another 200 business attorneys practicing in the state are likely to cross the $1,000-an-hour threshold over the next three years.
Businesses across Texas received letters during the past few weeks from the law firms that represent them delivering news of the higher rates.
More than two dozen corporate general counsel told The Texas Lawbook in exclusive interviews that the law firms they use for litigation, regulatory and transactional matters have announced rate increases ranging from 5 to 10 percent.
“We have certainly seen lawyer rates escalate during the past few years,” says Elizabeth Matthews, general counsel of Total Petrochemicals & Refining in Houston. “It can be hard to explain to our business clients how a particular lawyer is worth $1,000 an hour.”
Legal industry analysts and corporate general counsel say rates were flat or stagnant from 2008 through 2012, but that changed as elite national law firms opened outposts in Dallas and Houston.
Texas Lawbook research found more than twothirds of the $1,000-an-hour lawyers practicing in Texas are partners at national firms that have opened outposts in Texas during the past few years. The list includes Gibson Dunn, Kirkland & Ellis, Latham & Watkins, Sidley Austin, Simpson Thatcher & Bartlett and Weil.
The national firms charged higher rates, which gave Texas-based law firms the cover needed to significantly raise their own rates.
Six years ago, the number of Texas lawyers who charged $1,000 could be counted on one hand.
Today, there are at least 100 business attorneys practicing in Houston, Dallas and Austin who bill their corporate clients between $1,000 and $1,400 an hour, according to Texas Lawbook research
of federal bankruptcy records, court fee applications and interviews with law firm insiders and corporate general counsel.
Baker Botts and V&E are the two Texas-based firms that have the most $1,000-an-hour lawyers. Both firms have more than 20 lawyers charging four figures, according to court records and interviews with legal industry analysts.
Two dozen Texas lawyers list $995 as their hourly rates. More than 180 lawyers practicing in the state have hourly rates between $900 and $995 and another 220 charge between $800 and $895 an hour.
“Rates have blown up in recent years,” says Rudy Rodriguez, the general counsel at CEC Entertainment, parent company of Dallas-based Chuck E. Cheese’s. “You can still find reasonable rates in Texas, but you have to shop around.”
Texas Lawbook research found that about 15 Texas trial lawyers, including Tom Melsheimer at Winston & Strawn, Rob Walters and Bill Dawson at Gibson Dunn, Harry Reasoner at Vinson & Elkins, Yvette Ostolaza at Sidley Austin and Steve Susman at Susman Godfrey, garner $1,000 an hour or more.
A great majority of $1,000-an-hour lawyers in Texas practice corporate transactional law in Houston, including Mark Kelly at V&E, Mike O’Leary at Andrews Kurth, Andrew Calder at Kirkland & Ellis and Michael Dillard of Latham & Watkins.
“I have a difficult time grasping that $1,000 an hour is deserved, but I will pay it if I need that specific lawyer for a specific case,” says Chris Luna, senior legal director at MetroPCS in Richardson.
“When I have a basic real estate lease to be reviewed, I do not need a $950-an-hour lawyer working on it,” he adds. “A $350-an-hour lawyer will do just fine. It’s not brain surgery.”
Some corporate general counsel are pushing back.
“I don’t pay $1,000 an hour to lawyers very often,” Houston-based Halliburton General Counsel Robb Voyles says. “There are only a handful of lawyers in Texas who can command (such) high rates, in my opinion. Every four or five years, we go through rate hike spurts, and we are witnessing it now.”
Voyles and other corporate general counsel say they are able to hire excellent lawyers in Texas for $500 to $700 an hour.
Even so, Voyles says he does not squabble much with the lawyers he hires about rates.
“I understand that this is law firm economics and that their time or the hours are their product to sell,” Voyles says. “The rates need to be such that law firms can pay to attract and retain quality lawyers in order to keep them from being poached from other law firms.”