Reasonable Billing Rates

Matlink v. Home Depot & Lowes (S.D. Cal. 2008)

Matlink sued the big box retailers for infringement of its patent covering a supply re-ordering system. After some discovery “stonewalling,” the district court awarded attorney-fees to the defendants for their time wasted on a motion to compel. Here, the attorney fees were calculated based on the rates charged by the defendant’s three Southern California Winston & Strawn attorneys:

Partner with 15 years experience

$630 per hour

Associate with 6 years experience

$455 per hour

Associate with 1 year experience

$280 per hour

In awarding fees, the court found these rates “not … excessive in this context.”

A similar situation recently arose in Quantronix v. Data Trak (D. Minn 2008). There, the district court looked at the hourly billing rates for several Salt Lake City patent litigators from the Trask Britt firm:

Partner with 15 years experience

$350 per hour

Associate with 3 years experience

$195 per hour

Associate with 2 year experience

$175 per hour

The Quantronix court found these rates reasonable as well. “Considering the experience levels of the individuals on the Quantronix billing statements and the Court’s own experience with and knowledge of prevailing rates in this market, the Court finds that the hourly billing rates submitted by Quantronix are reasonable and commensurate with the rates of other attorneys in this area with similar knowledge and practice experience.”

When Richmond based attorneys from Troutman Sanders requested attorney fees earlier this year, they used the following rate chart:

Partner with 20 years experience

$350 per hour

Partner with 14 years experience

$350 per hour

Thomas & Betts Power Solutions v. Power Distrib., Inc., (E.D. Va. 2008).

The Florida IP firm of Allen Dyer requested similar rates in AC Direct, Inc. v. Kemp (M.D. Fla. 2008)

Founding partner with 40 years experience

$325 per hour

Attorney with 6 years experience

$190 per hour

The AC Direct court found those rates reasonable. “In the Court’s experience, the rates charged by the attorneys and paralegals assigned to this case are within the range of reasonable legal fees for the Orlando, Florida marketplace. Further, the fees are appropriate given the level of skill displayed in this case.”

Notes:

  • I saw the original report of Matlink in the Docket Navigator; The other cases were found in Westlaw.
Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

55 thoughts on “Reasonable Billing Rates

  1. After watching all the comments, I can’t help wondering is this amount of money the attorney really gets. Normally, I play a defendant role in a litigation proceeding and I pay the attorney a huge amount of money. For experienced attorney (+10 yrs), the hourly rate is around 650 USD/Hr and the amount listed for experienced attorney of more than 40 YRs roughly is equal to a paralegal hourly rate.
    It’s all lies. Stop saying that you don’t deserve such amount of money. Lier.

  2. “Well Andrew D, I do understand your point.”

    And yet you then attempt to mischaracterize it by suggesting that it reflects a communist philosophy. That’s pathetic.

  3. Assuming you’re skilled, at $100-$150 dollar an hour, you’d be a bargain. How many clients do you need to provide you with, say, 100 hours of work a month = >$120,000/yr, which is a reasonable salary if you haven’t bought yourself a second “investment home” or something asinine like that.

    In my experience a solo or small firm patent prosecutor isn’t doing anywhere near 100 billable hours a month. 60-70 is much more likely and some months are slower. What is everyone else’s experience?

  4. Well Andrew D, I do understand your point.

    I suppose it begs the question.

    Should the only man who knows where the ditch should be dug be paid the same as the men who dig the ditch?

    If you answer YES, then you’re a communist.

    From each, to each, and all that.

  5. fyi, just noticed this garbage “talking poster” patent mentioned at Patent Hawk.

    link to patft1.uspto.gov

    Issued in 1996. A talking poster. It’s a poster that talks. Or should I say, it’s a poster with a little speaker that reproduces a recorded sound.

    And the PTO granted a patent on it. Let’s watch it die.

  6. GP, you’re defending your pay on a market rationale (“99.9% of the people on the planet can’t do what I do”). I know we can defend our compensation on that basis — I said as much. I was looking at this more on a global, humanistic level.

    On the “99.9%” to which you prefer, keep in mind that only a tiny fraction of the world’s population ever had a realistic chance to prove that they can do what we do.

    I’m not suggesting that anyone lower billable rates or donate all their money to UNICEF. I’m just contemplating how I deserve every penny I’ve earned, and that I don’t. Sorry if that kind of thinking harshes anyone’s billable buzz.

  7. “i”‘s point was that these litigation associates only make in the same range as a patent agent, in fact less than some agents, and he’s right, except for the guys at Winston Strawn.

    However, the rest of them may not be patent attorneys or eligible to become such, as they may not have the technical qualifications to sit the patent bar. In addition, they are in cheaper job markets. IME I haven’t come across any patent attorneys billing less than $200/h, but I only know about the Washington DC area, and even here there are plenty of regular attorneys who bill less than that.

    The other side of the coin is that I didn’t realise that anyone billed over $400/h, but they are both at Winston Strawn.

  8. People making less than so called “Big Law” salaries:

    Really, don’t let it bother you. Chances are, you actually have a life, and they don’t.

    I began my career in the patent group at one of the ten or 15 largest law firms in the world. I can’t tell you how many people (partners and associates – it never gets any better) never married, never had children, worked the day after Thanksgiving, Christmas Eve, day after Christmas, every Saturday and half of every Sunday, every evening between 6 and 1o pm, every (other) holiday, etc. It was no better when I moved to the world’s most notorious “cbss.” The law is their mistress, their family.

    I am currently at one of the largest and best known intellectual property law firms in the world, but in a non-partner position. Yes, I will never bring home partner pay or bonuses, but money was never my god. I say goodbye to my family every morning before I leave for work, and I go home to dinner every single night. I don’t work weekends or holidays. My evenings are spent with my family. My children and wife actually have me at home.

    If money is what matters most to you, and you can’t be convinced there are things far, far more important things in life than riches, then I suppose you can be upset you may not make millions per year. Otherwise, count your hundreds of thousands of dollars (or more or less) in salary as a blessing.

    PS – The Federal Circuit just affirmed in Bilski.

  9. commonSense’s note also does not consider the risks borne by the partners for malpractice committed by the associates and all other business risks of the business. 35% for “furniture” is disingenuous–malpractice insurance alone costs about $10K/year/lawyer. AD’s comment doesn’t consider the cost of write-offs for clients who request services, and write-downs for work by associates that exceeds budgets and can’t be billed. In other words, the rates are set high because you don’t always get $280 for that associate, but if you can get it, you want to.

  10. AD – speak for your self.

    99.9% of people on the planet can’t do what I do, and 99% of attorneys can’t either. I’m worth more than I charge, and I charge a lot.

    As for DC/MM, you’re right, and you’ll remember me saying it a long time ago . . .

    The economy is going off of a cliff. We’ve been heading for the cliff for a long time – now, however, our foot is on the accelerator pedal. Barring a revolutionary type event, a black swan event, or divine intervention, we’re into a multi decade slow down as the fake debt society dies and peak oil arrives and drives whatever new economy forms into the Olduvai gorge.

    Enjoy the surfeit while you can – it’ll be all gone soon.

    As for billing rates? In nominal terms, they will not come down – in real terms, they are going to come down substantially for your basic patent prosecutor.

    Litigators worth 1000 an hour? Of course – the trick is knowing which one. The guy who sets the course of defense/offense is worth every penny of 1k an hour if he is better than most at what he does.

    Finally, DC/MM gives great advice. Any grasshoppers care to hear?

    You problem is that you are wearing golden handcuffs – you are too embedded in your system and its fixed costs.

    If you charge 150 an hour and work 2 hours a day, you are making a killing. An absolute killing, and your lifestyle is phenomenal.

    If 100k doesn’t strike you as enough money, then I suggest that you need to change your lifestyle ASAP to lower your fixed costs. Sell the McMansion and the BMW. Move to a small, energy efficient home. Give up the expensive club memberships, the 150 dollar a month TV.

    I love my lifestyle.

    To the other Sole Pract. guy who spends 50% of his time on non-billables – OUCH. That really sucks.

    Why on earth do you have a paralegal/secretary? That’s your first move – can that person and learn how to set up your own reporting letters.

    To put it in perspective, after the initial year of setting up a system, I put, maybe, 10-15% of non-billable time.

    Of course, I have as much work as I want, so “networking” and pissing away time handing out business cards at AIPLA time sucks is not an issue for me.

    Sir/Maam, I suggest you strive to become much leaner and more efficient – 50% non-billable time? Lord, that would be unbearable.

  11. I buy (some) of the partner billing rates. It would be interesting how much of a glance by a partner warrants billing at that rate. When I was in-house, a partner billed 30 minutes for reviewing a change of address request prepared by a second year (who billed an hour). Double-billing anyone? In any case, the attny’s admin probably had done most of the work.

    Somewhat shocked at the first year’s billing rate.

  12. Many of these billable rates are paid by corporations with top executives who are hauling in, literally, millions for what many would call shoddy work (stock prices tanking, poor management, golden parachutes, the list goes on).

  13. Many of these billable rates are paid by corporations with top executives who are hauling in, literally, millions for what many would call shoddy work (stock prices tanking, poor management, golden parachutes, the list goes on).

  14. Those Winston Strawn rates make me want to puke. Occasionally an exceptional lawyer is worth a lot (I know someone who used Morgan Chu and claimed his $950/hour was worth every penny), but $280/hour for an associate with one year behing him? That’s what I was being billed at when I’d been in the game for ten years. And since I went solo (i.e. less work, more money), I’ve reduced my rate. I hope W&S’s clients like W&S’s furniture and potted plants.

  15. Do some firms have a billing model which involves deliberate cross-subsidisation? To catch a corporate client in a long term ongoing relationship, offer to draft at an uneconomic USD 200 per hour (or less) then, to cover the overhead and make a fair profit, senior partners bill out at USD 800 or more. Clients agree, thinking that they will rarely need the 800 per hour operator.

  16. My experience is that lawyers at big firms work harder and get more done. Boutiques may charge less per hour, but you’re often paying $250/hr for someone to sip coffee. I’d rather pay $400/hr for the same associate at a big firm and know that he/she is working on my matters like a slave.

  17. “this kind of pay is unimaginably huge to the vast majority of people on this planet”

    I never understood how almost any HOURLY rate can be considered “huge.” This is the reason I ended up leaving the practice of law – billing by the hour is a terribly inefficient way to make money. I founded a company and make just over $1000 an hour – 24 hours a day, 365 days a year – whether I show up or not.

    Get some perspective.

  18. Oh fuhck, here comes Mooney with his poverty parade.

    “a second “investment home” or something asinine like that.”

    Mooney only has one cardboard box in the subway and he’s understandably bitter. Talk about a grumpy freak.

  19. A shift is about to happen, and I am on the ground floor. For the very first time, I feel a kinship with 6000 (e6k). We will bury you guys.

  20. We don’t deserve this kind of money. I mean this in a big picture sense. Sure, this is what the market will bear, we’re generally smart, do good work, etc. Still, it’s easy to lose track of how this kind of pay is unimaginably huge to the vast majority of people on this planet.

  21. Posted by: Not making that much | Oct 29, 2008 at 06:25 PM

    Are these NYC firms doing prosecution or litigation? If they’re doing prosecution, I know where my next set of clients is coming from…

  22. I know of several IP partners at NYC Biglaw firms that are billing out at rates around $1000. Senior associates at the same firms bill out at $650 plus. $840 is kind of cheap.

  23. “Look for the associates to get squeezed in the process”

    Now that firms are moving to “individualized salaries” (as oppposed to lockstep) the game for associates will be trying to work out the best deals, balancing minimum hours and compensation in view of perceived degrees of fungibility.

  24. “The economic crisis will result in lower attorney billing rates.”

    I doubt that. It may result in lower or stagnant cost estimates, but the billing rates with remain the same. Look for the associates to get squeezed in the process.

  25. “IP Law & Business wrote an article that Ray Niro charges $840/hr”

    Reminds me: how is that grumpy freak’s vendetta against Patent Troll Tracker panning out?

  26. “Couldn’t agree more commonSense. When I do the math of what I take home versus what I’m being billed out at, I realize if I were on my own I could bill myself out at 25% of what my firm bills me out at, and still come up ahead. The problem of course is that I wouldn’t have enough clients”

    Assuming you’re skilled, at $100-$150 dollar an hour, you’d be a bargain. How many clients do you need to provide you with, say, 100 hours of work a month = >$120,000/yr, which is a reasonable salary if you haven’t bought yourself a second “investment home” or something asinine like that.

    Prediction: the next year is going to bring a lot of changes. The economic crisis we tasted earlier this month was just the tip of the iceberg.

  27. I don’t believe those Winston guys would like Obama’s tax plan. On the other hand, I believe I will be stealing a lot of work from those same guys.

  28. “Interesting post. it begs the question…What is the highest hourly rate billed (IP only)? anyone know?”

    No, it doesn’t. It raises the question, or suggests the question, but it doesn’t beg the question. “Begging the question” means something completely different.

  29. Not to defend the above billing rates, but neither commonSense nor Captain Obviousness consider real overhead and activities that cannot really be billed to the client (or shouldn’t).

    As a solo practitioner, I easily spend more than 50% of my time doing non-billable work. That is not an unusual percentage for solos. I network, meet prospects, maintain a website, attend and conduct CLEs, prepare and collect bills, maintain my docket, manage my secretary/paralegal, do payroll, etc. I also try to do some billable work every day.

  30. Couldn’t agree more commonSense. When I do the math of what I take home versus what I’m being billed out at, I realize if I were on my own I could bill myself out at 25% of what my firm bills me out at, and still come up ahead. The problem of course is that I wouldn’t have enough clients, and big clients are skeptical of hiring a sole practitioner. They want the security of having a big firm behind them, and they pay a huge premium for that.

  31. The problem is the way BigLaw is structured : for every $1 paid by the client for work that is done by Joe Associate, 35 cents goes to furniture/rent in some posh office (which the lawyers dont necessarily enjoy but which is needed to “get the client in the door”); 35 cents goes to the partners who have nothing to do with the work of Joe Associate (assuming that Joe is not dumb and does not need partner review) and just skim off; 30 cents is paid to Joe Associate. Thus, of every 1 dollar paid by the clients, 70 cents goes to costs having NOTHING to do with the actual work done.
    Thus, in many cases, Joe Associate works for $60-100 and hour – not exorbitant for a guy with an engineering degree, a law degree (and potentially law school debt) and in many cases even a PhD.

  32. This is kind of a boon to our firm in the present business environment … at least we’re not Winston & Strawn!

  33. “I didn’t realize the payscale was so broad. Don’t most experienced agents cost ~$150-200/h?”

    Look at the work being done. Several of these involve litigation work, which (for better or worse) often commands a higher rate than prosecution, which an agent would do. That being said, I think it would be interesting to take a look at the rate/billing format variances in prosecution, if it were available.

    On another note, I wonder if all these grants of attorney’s fees encourages hiring the most expensive firm for litigation, as a deterrant to frivolous (or even arguably frivolous) requests from opposing counsel.

  34. Those rate filings are a real find. Too often courts help to secrete the billing rates by ordering the prevailing parties attorneys to submit an affidavit of services to the clerk, which never shows up on the docket. Then, the award just sets a total, or repeats the claimed amonut, which then is reduced by some act of higher math or equity.

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