Comments on: A primer on agency pricing and the bid process

By: Lasalle

Lasalle — Mon, 03 Nov 2008 02:14:38 +0000

In this environment, I would actually like to see agencies and law firms embrace telecommuting. It could be done quite cheaply (agency would not need as much office space and supplies, coffee, cookies, etc) and with minimal disruption. I’m sure that agencies and firms will have concerns about two things: confidentiality and productivity, not necessarily in that order. This could be solved by software controls and daily productivity requirements. Both of these are present for the most part in most contract attorney work environments anyway. What would it take for this to get to the implementation stage?

By: FTI Consulting takes it up a notch, and the trend continues … « The Posse List

Thu, 07 Aug 2008 11:12:47 +0000

[...] How? Why? Law firms are squashing the agencies to bring down costs to their clients and to improve their profitability. Taking the D.C. market as an example, we saw this earlier this year when Howrey changed its rate structure to agencies. Thanks to some cooperative law firms and agencies, we’ve seen a number of RFPs (request for proposal) and the charge rate to agencies from law firms has dropped which is why D.C. (as an example) has seen $32/33 an hour projects popping up rather than the standard $35 an hour rate. The agency eats into its margin and/or knocks down the hourly rate to contract attorneys. For our primer on agency pricing and the bid process go here: http://posselist.wordpress.com/2008/06/21/welcome-to-our-posse [...]

By: The Posse List

The Posse List — Wed, 25 Jun 2008 17:31:20 +0000

In answer to the question about commissions for staff attorneys, in the D.C. market there is normally a $6,000 cap on an agency commission. An agency normally gets $2,000 for every 8 weeks a candidate works. That usually caps out at 24 weeks because at the 24 week point the agency hits $6,000.

By: J

Mon, 23 Jun 2008 17:00:33 +0000

No to be knit picky, but I don’t fully understand your last paragraph.

1) it isn’t clear to me what you are referring to agencies “doing.” i’m not sure they are “pumping up” their revenue. in fact, it seems rather that they’re being squeezed.

2) any investor worth his salt, or a bank lending money for that matter, isn’t going to care about revenue pumping if the business is losing money, or net margins are anemic.

But, frankly, that’s where margins should be for a broker. There value has been wildly overstated for some time. How else can you justify 30+ agencies in the DC market alone?

By: Jake

Jake — Mon, 23 Jun 2008 16:47:20 +0000

To believe lawyering is any less a product than air conditioning repair or iPhones is ridiculous. Despite our penchant for verbosity and our love of embellishing all we do, we provide a service no different from any other industry. What surprises me is the culture of believing we are somehow unique among the service industries. This overriding and pervasive belief is so strong that most firms can’t even wrap their heads around the truth that there are thousands of attorneys with potentially millions of man hours working for $20,000-$30,000 a year throughout the entire U.S. While these firms pay over $30/hour for often unlicensed document reviewers, there are many attorneys desperately seeking any employment who would be willing to work for much, much less.

Many firms have such arrogance that they refuse to recognize that most of us passed the Bar by studying BarBri for a few weeks because we received no education in practical matters at law school. The firms and the people who work there pat themselves on the back so often that they begin to believe that the large sums of money they bring in is somehow related to their intelligence rather than their ability to join social clubs and head up local committees on domestic violence or what have you. We all learned very little at law school, studied with BarBri because we knew very little that is tested on the Bar, and then have the audacity to think we’re different than a plumber. But luckily the industry is changing, slowly.

By: LPD

LPD — Mon, 23 Jun 2008 15:00:15 +0000

This is great information. Would you say that the same basic principles apply for foreign language reviews, or is that a whole different ball game? Thanks.

By: lanka

lanka — Mon, 23 Jun 2008 14:19:11 +0000

How about woking from home. It may not be easy but worth a try considerating the cost.

By: An Old Timer

An Old Timer — Mon, 23 Jun 2008 13:43:26 +0000

Good primer. As you point out, lawyering is every bit as much an industry as petrochemicals, so it’s not surprising that the same competitive pressures and responses that operated in John D. Rockefeller’s time operate in Mayer Brown’s as well. In any industry, some market participant is always prevailing, if only for the moment, while another is on the way out. This may be particularly true of lawyers, whose business advice may not always be matched by their business acumen.

My observation, however, is that there is no single model of the contract attorney business. There are law firm sweatshops in the suburbs paring costs, pushing volume, and hiring warm bodies to click through documents on a project-by-project basis, but there are also white shoe firms downtown building long-term relationships with contract attorneys who float from project to project. There are contract attorneys hunting for needles in electronic haystacks, and there are contract attorneys performing substantive work. There are non-lawyer supervisors of contract attorneys unable to give direction on legal issues, and there are senior associates supervising projects who should have better things to do.

You may believe that the law has long ceased to be a profession, but I suspect that Mayer Brown would demur. Many large firms continue to carry junior and middle associates at large cost for years before they can bring in new clients or produce work that makes a difference in the representation of the firm’s existing clients. They call it lawyer development. If and when the substantive work typically handled by junior and middle associates shakes off to contract attorneys, I will believe that the profession is dead and the business is truly run by accountants.

By: Temporarily Astute

Temporarily Astute — Mon, 23 Jun 2008 13:24:56 +0000

Great post! This would appear to explain why AGENCIES (not necessarily the law firms) are trying to hold down the hours on projects so that the bulk of the work is done in the 1st 40 hours of each week. I’m presuming that the law firms are not paying the agencies 150% for “overtime,” but would love to see more informed comment on this latter point–the agencies having a disincentive to allow their temps to make any money. This behavior seems to have changed dramatically over the last few years. Exactly who is the “principal” for these “agencies?”

By: Joe Miller

Joe Miller — Mon, 23 Jun 2008 12:59:52 +0000

Thanks for this. I have often wondered about “the math” behind hourly rates. It seems that the decreased demand for second review work should stimulate agencies to train CAs to do more than just document review.