It was only yesterday that I was blogging on how law firms should consider lowering billing rates as part of their marketing mix. And this morning I see that Reed Smith has cut billing rates by 20 percent. Yes, they are cutting associate salaries, but they are also cutting the billable hour requirements to allow for, gasp, more training:
Reed Smith Global Managing Partner Gregory B. Jordan said the moves were in response to a very clear message from clients and the marketplace. “As part of the reset that’s going on in the business world, clients are expecting their law firms to drive their costs down,” Jordan said. One of the biggest areas of friction was starting salaries for entry-level associates, he said. And it’s really the rates that most directly affect cost, so the firm decided to take a swing at both, he said. As part of the reduction in salary and billing rates, first-year associates will also see a reduction in their billable hour targets from 1,900 to 1,700 hours. That was done in part, Jordan said, to ensure they could take advantage of the new training programs that go along with the competency-based advancement model.
I say, kudos to Reed Smith. You’re listening to your clients, adjusting your business model, and you are doing so in a transparent manner.