Attorney pay at top-tier firms is like compensation for executives of public companies. Amid hand-wringing, the numbers keep going up and up.
The reasons are understandable. Law firm managers feel pressure to raise compensation to attract and retain the best attorneys-and to keep up with what other firms are doling out.
The people running those competing firms feel the same pressures, accelerating the upward spiral.
Hence, top attorneys in Indianapolis in the most complex practice areas now have hourly rates flirting with or even reaching $500 an hour-pay that's sure to give some clients, especially those that are struggling, sticker shock.
Alan Levin, managing partner at Barnes & Thornburg, acknowledges the tension as the firm begins work on 2009 budgets.
"When clients are incurring financial downturns, you want to make sure you are not pricing yourself out of the market," Levin said. "So it does get more complicated."
At the same time, managers of law firms in Indianapolis say they have nothing to apologize for.
"I think our pay is handsome yet very attractive for the level of talent," said Robert J. Hicks, managing partner of Taft Stettinius & Hollister in Indiana.
For years, law firms here and across the country have pushed through healthy increases in pay. In every annual survey conducted by The American Lawyer magazine from 2003-2007, at least one-third of U.S. firm leaders responding planned to raise billing rates more than 5 percent.
It's not just that law firms want more money flowing into coffers. When the firms try to bring aboard newly minted graduates, they have to take into account what they eventually could earn in money centers like Chicago and even New York, where some partners now charge more than $1,000 an hour.
After Sommer Barnard merged into Cincinnati-based Taft Stettinius this spring, the combined firm set pay for first-year associates at $107,500-substantially higher than the $100,000 other firms were paying. The move is pressuring other top firms to follow suit.
Court filings in the Indianapolis probate case for Ruth Lilly, the 93-year-old great-granddaughter of the pharmaceutical firm's founder, show how quickly rates can climb. In early 2005, the standard hourly rate for Timothy Riffle, a Barnes and Thornburg partner representing her conservator, National City Bank, was $370. This year, his hourly rate for long-standing clients is $440.
The rates were contained in a recent court filing asking Judge Charles Deiter to eliminate a $350-an-hour rate cap he imposed in 2006. Members of the Lilly family said in a filing that they're OK with eliminating the cap but will "remain vigilant ... to make sure that all legal fees are reasonable."
Riffle's 2008 rate wouldn't raise an eyebrow in bigger cities, where attorneys routinely earn much more-even when they trek here to do the work. Attorneys with Dallas-based Haynes & Boone, for instance, are earning as much as $825 an hour representing ATA Airlines Inc. in its bankruptcy liquidation.
Taft's Hicks said the disparity between rates for Indianapolis lawyers and their bigger-city brethren is a selling point for law firms here.
"I think the Indianapolis legal community as a whole is a very good bargain for sophisticated commercial clients," Hicks said.
Score one for IU
The September issue of Portfolio magazine notes that Citigroup CEO Vikram Pandit taught at Indiana University in Bloomington in the early 1980s, while completing his doctoral dissertation, "Asset Prices in a Heterogeneous Consumer Economy."
"He was an excellent teacher, but being from India and New York City, he felt that maybe Bloomington was a little too small," Robert Klemkowski, who headed the business school's finance department, told the magazine.
While at IU, Pandit worked on a project for Morgan Stanley, where he soon landed a job.
Pandit comes off a mental heavyweight-in contrast to Fortune magazine's portrayal of former Bear Stearns CEO Jimmy Cayne, a former Purdue student widely blamed for this year's collapse of the investment firm.
In a recent issue, the magazine describes Cayne as "an indifferent student at Purdue University, spending more time playing bridge at his fraternity house and on intramural sports than studying. He left college one semester shy of his degree and joined the Army."
Finish Line on fire
Finish Line Inc. shares continue to march higher, as the retailer regains its footing after nearly tying the knot with Tennessee-based Genesco Inc.
Stock in the Indianapolis company reached nearly $12 in recent days, bringing its gain for the year to almost 400 percent.
Finish Line stock dove last year after the company said it would buy Genesco for $1.5 billion. Analysts feared the highly leveraged deal would propel Finish Line into bankruptcy. The Indianapolis company reached a settlement this spring allowing it to walk away.