Robert C. Furr from Furr & Cohen. Photo: Melanie Bell
Florida's bankruptcy firms reported little or no rate hikes last year, while the state's larger Am Law 200 law firms all expect their own rates to rise.
The Daily Business Review collected reported rates in bankruptcy filings to get a sense of whether settlement rates in Florida are rising or falling. Compared to the average business rate in 2018, the median of bankruptcy partners among companies that created both lists increased slightly by 1.2% – a sign that interest rates among regional companies in Florida remained relatively constant.
The median of partners in the total sample of 71 Florida bankruptcy firms was $ 400. The median for employees was $ 319. The data do not take into account the creditor representation of larger companies such as Akerman, DLA Piper or White & Case, as these rates are not public. Representing creditors is often more lucrative and many attorneys in the room charge over $ 1,000 an hour.
At Furr & Cohen, which reported the eighth highest average billing rate, the average billing rate fell 7%. Co-founder Robert Furr said the slight decline was accidental. Prices can vary from year to year depending on whether he has offered a mixed fee or not and which personnel models he uses. Furr & Cohen reported an average partner billing rate of $ 500. In 2018, the company's average partner rate was $ 538.
"The drop is just random," said Furr. "I have not increased my partner quota in recent years."
While Furr and other bankruptcy firms do not appear to have raised interest rates, all major Florida companies expect increases. Holland & Knight, Shutts & Bowen, Akerman, Greenberg Traurig, Greenspoon Marder and GrayRobinson increased their rates by more than 3% in the past year and, according to ALM data, expect a company-wide increase of more than 3% for 2020.
Gretta Rusanow, head of advisory services at Citi Bank's law firm, said companies in the southeast, which include several companies in Florida, saw an average billing rate increase of 5.2% in 2019. This increase was fourth nationwide ahead of six other regions, including Washington, DC, northeast and northern California.
However, prices in Florida have not yet risen to the level demanded by lawyers in other major markets such as New York, DC or Los Angeles. According to the Canadian practice management company Clio, the average billing rate for lawyers in Miami was $ 297 in 2017. This is the seventh highest value among the 10 major metropolitan markets that the company has examined. Lawyers in New York City and Los Angeles averaged the most at $ 368 an hour and $ 346, respectively.
Joe Ankus, a seasoned legal recruiter in Florida, said that because of the state's economic situation, prices in Florida are unlikely to match other metropolitan areas: more local, smaller businesses, and less of the large Fortune 500 corporate customers who regularly have prices nearby of $ 1,000.
Around 40 Fortune 500 companies are headquartered in Florida, including NextEra Energy, Publix Super Markets and Office Depot. For comparison, 95 Fortune 500 companies are based in New York and 118 in California.
"Miami has never seen itself in the same tariff structure as some of the more expensive markets," said Ankus. "It has nothing to do with the quality of the work; many companies represent local companies instead of national companies."
Prices can also vary within an internal market. Large multinational companies such as DLA Piper and White & Case often charge fees that are higher than locally based Am Law 100 companies such as Greenberg Traurig, Akerman and Holland & Knight. Smaller companies like Furr & Cohen who don't want to grow with the Am Law 200 can afford to keep their rates constant year after year.
The increasing rates of large companies offer smaller companies the opportunity to hire highly qualified lawyers. Many Big Law lawyers are affected by high rates that can shrink their client base, and smaller businesses can benefit.
Adam Foslid, former litigation manager at Greenberg Traurig, said his prices have changed moderately since he moved to boutique litigation firm Stumphauzer Foslid Sloman Ross & Kolaya last year. He said customers appreciated the lower rates and fewer conflicts in boutique practice.
"I think a lot of customers prefer smaller boutiques like mine, especially in litigation," he said. "It also opened doors for new opportunities and new customers that I could not be exposed to before."
Boutiques can also be more flexible with customer financial arrangements, said Luis Suarez, who recently left Boies Schiller Flexner to found boutique company Heise Suarez Melville along with two other Boies Schiller partners. Many larger companies reported that less than 10% of their revenue came from alternative fee schemes.
"Smaller companies can be more flexible in pricing and we can push the fixed fee regime forward," said Suarez. "And if they insist every hour, we can be more competitive in the market than a large national company."
According to study results, lawyers keep a head start with increasing billing rates