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Thursday, February 24, 2011

G-Men: Tax Lawyers Who Charge $1,000 Per Hour

$1,000 Wall Street Journal, Big Law's $1,000-Plus an Hour Club:

Leading attorneys in the U.S. are asking as much as $1,250 an hour, significantly more than in previous years, taking advantage of big clients' willingness to pay top dollar for certain types of services. ...

Harvey Miller, a bankruptcy partner at New York-based Weil, Gotshal & Manges, said his firm had an "artificial constraint" limiting top partners' hourly fee because "$1,000 an hour is a lot of money." It got rid of the cap after studying filings that showed other lawyers surpassing that barrier by about $50. Today Mr. Miller and some other lawyers at Weil Gotshal ask as much as $1,045 an hour. "The underlying principle is if you can get it, get it," he said. ...

"Plenty of clients say to me, 'I don't have any problems with your rate,' " said William F. Nelson, a Washington-based tax partner at Bingham McCutchen, who commands $1,095 an hour, up from $1,065 last year. "But there is price pressure for associates, especially junior lawyers.

In an accompanying chart, the WSJ lists lawyers with billing rates of $1,000 per hour or more, including these tax lawyers:

All 13 members of the $1,000 per hour tax club are white men. Four (31%) of the 13 went to U.K. colleges and law schools. Of the nine U.S.-trained tax lawyers:

  • 3 (33%) got Tax LL.M.s (Georgetown, NYU (2))
  • 6 (67%) went to Top 25 law schools (Boston University, Harvard (2), NYU, Virginia (2)); the others went to Boston College, Tulane, and U. Washington
  • 5 (56%) went to Top 25 colleges (Brown, Chicago, Georgetown, Swarthmore, Yale); the others went to Case Western, Creighton, Mississippi State, and Wisconsin 

For more, see:

http://taxprof.typepad.com/taxprof_blog/2011/02/g-men-.html

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Comments

I pay $1,250 per hour to read TaxProf, do you think I'm being overbilled?

Posted by: mike livingston | Feb 24, 2011 3:06:40 AM

Thanks for the data. How do these educational backgrounds compare with those of top lawyers in other areas of practice?

If I may flatter: I would guess that legal ability counts for more relative to smoozing, connections, and office politics in tax law compared to other fields. Do other fields (in elite law) have a greater proportion of women and Harvard-Yale grads? Taste and snobbery are confounding variables, tho--- maybe smart women from Harvard dislike tax law and find it think it's too mundane.

Posted by: Eric Rasmusen | Feb 24, 2011 7:33:08 AM

I also noticed Mr. Fleder, who practices in ERISA and exec comp--the other two labor/employment attorneys on the list don't seem to be as tax-related. I notice that Lehman's collapse seemed to inspire these rates the most, not suprisingly. For the UK lawyers, I'm wondering if the exchange rate of the dollar relative to the pound pushes their rates up/down. Dare I ask if tax rates affect their rates? It may be that they just have a fixed U.S. rate for "away games" which factors in travel and extra expenses. I'd be curious to see what they bill in the UK. For instance, Ian Taplin (tax) has the second highest rate on the list overall, and is a bit of an outlier from the other rates, but he seems to be based out of their London office.

Posted by: js | Feb 24, 2011 10:12:11 AM

How many hours per year would these folks have to work to match the salary of the top 10 hedge fund managers? I think they make about $1 billion p.a. So at $1000 rates, they'd need to work one million hours per year...or about 2000 hours per week, assuming a 2-week vacation. Heroically assuming a 100 hour week of each, they'd still make 20 times less than the big hedgies. I find little to be concerned about here.

Posted by: Calliope | Feb 24, 2011 11:31:11 AM

Once upon a time when I was a general counsel, I found it a lot easier to pay $1,000 per hour and up for senior partners with great judgment, knowledge, and skills, than $300 per hour and up for junior associates who know little or nothing and work very inefficiently.

Posted by: DBL2 | Feb 24, 2011 10:25:29 PM

I expect a lot of law is like computer programming, where somebody who knows what he is doing is worth 10 times the typical worker.

Posted by: Eric Rasmusen | Feb 25, 2011 8:58:31 AM

I agree with Calliope. In many cases an hour with a good lawyer will beat 10 lawyers who know very little. the fee is not unreasonable, in fact if they billed all 40 hours a week the gross would be about $1,920,000 a year. There are a lot of financial professionals who make more than that right now who do not have law degrees. This is also a "gross" amount-rent,phone etc.

Posted by: Nick Paleveda MBA J.D. LL.M | Feb 25, 2011 10:50:42 AM