One-third of law firms markup contract attorneys more than 200 percent!

An American Lawyer survey in the fall of 2006 of the 200 largest US law firms uncovered the practice that “nearly one-third (31 percent), billed out their contract attorneys at more than a 200 percent markup.” Thus, a contract attorney for which the firm pays $40 an hour was billed by that group of firms more than $120 an hour. Nice work if you can sell it.

Law departments should attack such surcharges. Some overhead is appropriate, to be sure, because there are costs of finding, training, retaining, and managing contract lawyers. But for firms to double their margins on staff that the law department could retain at cost – which some portion of the firms did who only billed them at a 100 percent markup – is an unwarranted excess.