Covid-19 Fallout: Pressure on hourly fee of top consultants, lawyers

MUMBAI: Some top lawyers and consultants, who charge clients by the hour and are now working from home due to the Covid-19 pandemic, have seen their fees slashed across assignments as cash-strapped clients renegotiate and question the time actually spend on the job.

Many corporate law firms that charge anywhere between Rs 20,000 and Rs 75,000 per hour have slashed hourly rates or reduced the number of hours billed under pressure from clients, industry trackers said.

The big four — Deloitte, PwC, EY and KPMG — that charge anywhere from Rs 1,000 per hour for auditing to Rs 12,000 for advisory work have seen these getting slashed by about 20-25% per hour, they said.


“In some of the technology implementation, tax compliance and consulting work-…there is a huge pressure from clients since the executive is now doing the same work from home,” a senior partner in one of the big four firms said on condition of anonymity.

While the rates have been slashed or renegotiated almost across service lines, those tasks where executives are required to be present at the client’s office or factories have been impacted the most, insiders said.

Many companies are raising queries on how they would know whether the executive whose hours are being charged was actually working or “watching Netflix,” said a partner at a law firm.

With clients scrutinising hourly worksheets maintained and billed by lawyers and consultants, many professional services and law firms are now looking to introduce technology that would track hours actually put into working on a project by an executive. This would then be forwarded to clients as proof of working hours, insiders said.

According to industry trackers, while there is no negotiation of slashing rates in auditing where clients are charged Rs 1,000 to Rs 1,500 per hour, there have been several negotiations in management consulting . “So, in some cases clients are increasingly opting for success-fee option and only paying about 20-30% fees upfront,” said a senior deal partner in one of the big four firms.

Tax advisory work—where the per-hour fees charged by partners in firms ranges from Rs 5,000 to Rs 15,000 depending on the seniority of partner involved and complexity of assignment—has also seen a major correction.

Industry trackers said consulting and advisory work—whether in M&A space, turnaround or taxation—has been most impacted. Many clients are halting work, shifting to success fee model, or slashing rates by at least 20-25%.

“In these difficult times, there is a need to work with clients and make sure they come out strong; that will surely rub off on consulting and advisory businesses over a period of time,” said Sanjeev Krishan, partner and leader, deals, at PwC India.