By Elizabeth Amon
Nov. 5 (Bloomberg) –Companies including Square Enix, Shell Oil Co. and Fidelity Investments are trying to reduce legal costs after swallowing 6 percent to 9 percent annual fee increases for the past eight years, according to the Association of Corporate Counsel. Hourly rates should drop in 2009, given the decline in legal business with the economic slowdown, the Washington-based group said.
“As we start to see law firms slow down in response to the economic situation, general counsels are going to realize that their leverage is continuing to increase,” said James Wilber, a Milwaukee-based consultant at Altman Weil who advises corporate legal departments. They likely won’t accept automatic rate increases and will push for leaner staffing, he said.
Forgoing fee increases could shave 1 percent to 2 percent off revenue next year, according to Terry Conner, managing partner of Dallas-based Haynes and Boone, which he says will be up 7 percent to 10 percent. While he doesn’t foresee the need to fire associates, his law firm may cut hiring if the economy remains poor in 2009, he said.
Even with corporate backlash, many firms are still planning fee increases of 6 percent to 7 percent for 2009, said Andrew Johnman of Barclays Capital in New York, which lends to law partnerships.
“You would’ve thought firms would have backed off in this environment,” he said.