RATE RAGE - Yesterday, we told you about how law firms are hellbent on raising rates significantly in 2023. This morning, we invite you to take a guess how in-house counsel feels about that plan. As Law.com’s Hugo Guzman, Trudy Knockless, Maria Dinzeo and Greg Andrews report, legal department heads are chafing at the idea that law firms would push ahead with aggressive rate hikes when they know legal departments are under extraordinary pressure as the economic outlook sours. “Law firms are claiming to raise rates due to inflation, but anyone who’s ever taken an economics class knows that the real reason they’re raising rates is because they think no one will notice under the guise of inflation,” said Stephanie Corey, a former legal-ops leader at HP and VMware who now leads the consulting firm UpLevel Ops. “That being said, legal departments who are budget-conscious—which are the majority, I believe—can’t shoulder this increase. Many of our clients are being asked to cut anywhere from 5-20% of their budgets, so the math just doesn’t work out.” Jason Winmill, managing partner of the legal department consulting firm Argopoint, said leading law firms are unleashing 2023 rate plans that are all over the map, ranging from no increase to hikes of 45%. “This feels more like law firms throwing spaghetti up against a wall and seeing what sticks. This is a corporate legal roller derby, and I’m predicting there’s going to be a lot of crashes, wipeouts and disabled vehicles on the other side of this,” he said.
PAY DELAY - Meanwhile, as law firms eye price hikes next year, they’re having a heck of a time collecting on this year’s bills. Law firm leaders and analysts told Law.com’s Andrew Maloney that volatility in the markets throughout 2022 has led to difficulty in pricing and polishing off deals, increasing the collections cycle across the Am Law 200 and causing firms to seek progress payments or consider selling receivables. Through the first three quarters of the year, the collections cycle lengthened by 3.7%, according to analysts at Citi’s Global Wealth at Work Law Firm Group. That’s in contrast to last year, when the collections cycle shortened by 2.1% through the first nine months of the year, as firms maintained an emphasis on billing discipline that helped them through the onset of COVID-19. This year, though, the delay has also manifested in 10.4% growth in accounts receivable and a 5.8% increase in unbilled time carried by clients, according to Citi. Gretta Rusanow, head of advisory services for the Citi group.
ON THE RADAR - Palo Alto Networks, a multinational cybersecurity company, was hit with a patent infringement lawsuit Monday in Delaware District Court. The lawsuit, which asserts two patents related to monitoring network traffic for unusual or suspicious activity, was brought by Potter Anderson & Corroon and Proskauer Rose on behalf of BT Americas Inc. and British Telecommunications. Counsel have not yet appeared for the defendant. The case is 1:22-cv-01538, Bt Americas Inc. et al v. Palo Alto Networks Inc. Stay up on the latest deals and litigation with the new Law.com Radar.
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