Billable rate v Salary breakdown question Forum

[Anonymous User]

I had a question re: billables rates and salaries and what else the firm has to pay for.

I know that m&a associates bill the highest rates at most firms (roughly $100/hr more than lit at my firm). Who sees the benefit of that? I don’t work at a lockstep firm, so I was wondering if the m&a associates just get paid significantly more or get bigger bonuses. Or is it partners in m&a who just get to pad their profits more?

I know that firms have to pay for office space/assistants/malpractice insurance and all that, but what % of your Billings should you be getting? 1/2?

Sorry for the random questions. I know only partners will probably know the answer to this, but was just curious if I should choose m&a over another department when we have to decide.

[Anonymous User]

News to me that M&A associates bill more. At lockstep firms they definitely don’t get paid more, but I can’t speak to your situation. I kind of doubt it though.

Definitely significantly less than 1/2 to answer that question.

[Right2BearArms]

I had a question re: billables rates and salaries and what else the firm has to pay for.

I know that m&a associates bill the highest rates at most firms (roughly $100/hr more than lit at my firm). Who sees the benefit of that? I don’t work at a lockstep firm, so I was wondering if the m&a associates just get paid significantly more or get bigger bonuses. Or is it partners in m&a who just get to pad their profits more?

I know that firms have to pay for office space/assistants/malpractice insurance and all that, but what % of your Billings should you be getting? 1/2?

Sorry for the random questions. I know only partners will probably know the answer to this, but was just curious if I should choose m&a over another department when we have to decide.

In some instances (at top M&A firms and the like), it may mean bigger bonuses, but really its just the firm getting what the market will support. A $5-6 mm legal bill on a $5 billion merger, where the banks are also making $50+ mm on the financing/offerings, etc. is a rounding error and will likely get paid without a second thought. A $1mm bill on a litigation matter worth $20-30mm will raise eyebrows and most GCs would throw a fit. Even on bet the company litigation, the goal is minimizing cost, rather than maximizing upside as it is in large deals. It is a different outlook on the client's part and, rightly or wrongly, most companies are much less sensitive about legal bills in corporate deals.

In the end, better for partners. This is why there has been such a shift at many big firms since the 1980's. With a few exceptions, litigation departments used to dwarf the number of truly corporate lawyers. The rise of the leveraged buy-out and word processing (which has made documents get much longer and more complex because you can easily copy/paste from precedent) has made corporate law the money maker for most firms.

[Anonymous User]

at lockstep firm i bill out around 600 per hour. work about 2400/year. make lockstep so 195k. I get less than 20 percent of my billables

[Anonymous User]

OP here.

So from the responses, what I’m assuming is that, for the most part, higher billing rates for associates benefit the partners and it won’t really matter for me unless I become a partner (not my goal).

I guess it would cause some issues if a firm paid associates more just because the associates practice in a certain area over another area.

As to the billing rate to income, I guess since the first part of the question seems to state there is no difference, this doesn’t matter.