A Speaker From Legora Says Big Firms Overcharge for Juniors and Undercharge for Partners

A speaker from Legora, a company that builds artificial intelligence tools for lawyers, argues that law firms price their people backward. In his view, firms overcharge for the hours worked by junior lawyers, called associates, and undercharge for the hours worked by senior lawyers, called partners.

The math he cites helps explain why. He puts yearly spending on legal services at about $1 trillion, compared with about $40 billion on legal technology. That is 4 percent software and 96 percent human service. He also describes law as supply constrained, with demand for help larger than the number of lawyers available to do it.

In that market, firms bill by the hour. He said he had recently received a bill at $1,800 an hour for senior time, with associates at $800, and noted that rates at Kirkland can reach $4,000 per hour. He hedged on the second half of his own claim, saying "I don't know if they're under charge."

His point is about relative value. He said "30 minutes of a Kirkland partner's time when it really matters can be worth a lot more than that," especially in what he called "bet the company litigation," where avoiding one pitfall "would have costed the company tens of millions of dollars."

That leaves firms with a pricing problem. He said "the only way they know how to price that is to overcharge for the associates."

That arrangement is now under pressure. Legal software now does routine review that associates used to bill for. Separately, he said some firms are experimenting with fixed fees for a transaction or a fundraising, and with taking part of the success fee for winning a case.