A “new normal” continues to take root at law firms, according to a survey showing increases in the use of alternative fee arrangements.

Almost three in 10 in-house lawyers said they used more alternative billing arrangements in 2010, and 53 percent said they used strictly flat-fee billing on a case or project, up from 48 percent in 2009.

It’s a revealing peek into the state of the economy, and while it doesn’t mean the death of the billable hour it does underscore the ongoing debate about it — we’ve written about it here, here, here and here in recent months.

The Association of Corporate Counsel and The American Lawyer magazine do say, however, that the results of their survey show a reluctance to revert back to “the way we used to do it” when it comes to paying for legal counsel and services.

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A few years ago I was chatting with a local attorney whom I’d gotten to know in my technology reporting days. He and a few colleagues were leaving their big law firm to start a Baltimore office of another firm.

His entrepreneurial ambitions intrigued me, as did his reasons for wanting to strike out on his own — pressure to bill hours, a desire to work more closely and strategically with smaller clients. They seemed fairly universal, not just unique to the practice of law (at least if you substitute in “pressure to close sales” for “pressure to bill hours”).

A recent article at Slate breaks down the legal business model in post-economic meltdown terms and paints a pretty stark portrait of a model “in which the nation’s largest law firms turn the top law students into billable-hour-crazed associates and, sometimes, partners.”

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Here are some tidbits to take your mind off Maryland’s heartbreaking loss yesterday:

• Jeffrey Toobin at The New Yorker gives three immediate observations about the legal implications of the health care legislation, including how it might affect the Supreme Court.
• Above the Law has more on the potential, legal fallout of the bill.
• Speaking of SCOTUS, an Iowa lawyer provides an interesting take in today’s Baltimore Sun about its upcoming Snyder v. Phelps case.
• Encyclopaedia Britannica files a $250 million lawsuit against Dickstein Shapiro LLP for allegedly botching a patent application. (HT: Law Shucks.)
• A former Wisconsin state employee has won a discrimination lawsuit against his employer… the State’s Equal Division. (HT and “Dept. of Irony” headline to Overlawyered.)
• Today’s business tip – prevent profit “leaking” by recording all of your time while in the office.

In my story today about a collection dispute between two lawyers, I was unable to include some interesting expert witness testimony.

Leonard H. Shapiro, a longtime criminal defense lawyer in Owings Mills, testified for the defense about the $10,000 legal fee at the heart of the case. George Michael Perez paid that amount to T. Wray McCurdy up front to defend Perez against arson charges filed by prosecutors in June 2007.

The sides dispute whether the money was an engagement or retainer fee. Shapiro, who called it an engagement fee based on the contract, said that was a reasonable amount regardless of what type of fee it was because of the complex nature of arson cases.

“Almost always you’re dealing with expert testimony and lots of discovery,” he said. “They are circumstantial cases developed through evidence.”

Under cross-examination by Michael T. Wyatt, Shapiro said retainer fees are different in a criminal case than in a divorce case. A criminal retainer does not have to be earned, he said, and there are some cases where an entire fee is required up front.

Shapiro then hypothetically made himself a lawyer who received a $10,000 fee to defend a client against arson charges. Shapiro said that money would be a reasonable fee if he called the State’s Attorney’s office and pointed out the flaws in prosecutors’ case, which ultimately led to the charges being dropped.

“Is $10,000 for a phone call reasonable?” Wyatt asked.

“In certain circumstances, it could be,” Shapiro replied.

Thoughts from the peanut gallery?

NALP has done a survey of lawyer starting salaries and has discovered that the median salary for new lawyers in 2008 was $72,000 and the mean was $92,000. This tells us… approximately nothing.

Almost nobody is actually making these salaries. Instead, starting salaries are clustered around $50,000 and $160,000, giving NALP’s accompanying graph the look of a weird stylized two-humped camel. (You don’t see it? Not even a little?)

2008 actually had the widest bimodal salary distribution of any previous year, meaning that the pay gap between those working at white-shoe firms and those doing almost anything else was bigger than ever.

As the National Law Journal points out, this graph may look different next year. While in 2008, the going rate for a first-year associate at a top firm was $160,000, in 2009, many big firms have scaled back pay in a nod to the terrible economy. In Maryland alone, DLA Piper, Miles & Stockbridge, McGuire Woods and Venable have all decreased starting salaries, and I’ll be shocked if some of the other big firms here don’t follow suit.

Of course, there’s a limit to how much the look of this graph will change from this year to next. While the big firms are lowering salaries, they’re not really going below $120,000 or so, and you can bet other entry-level lawyers are not seeing their salaries increasing.

It was only a matter of time.

Our 2009 incoming associate salary chart showed earlier this month that Venable was still planning on paying the current crop of incoming associates–well, the crop that was supposed to start in September but now will start in January 2010–last year’s going rate of $160,000. According to Above the Law, an in-house memo says that first-years will now earn a mere $145,000, in line with what other big firms, such as DLA Piper, are doing.

That’s just the beginning of the cuts. Everyone, possibly even up to equity partners, will see their numbers go down, effective July 11.

Today, check out The Daily Record’s first-ever Money issue of Maryland Lawyer, which contains our annual associate salary survey, financial information on the nine firms in Maryland with revenues over $40 million, and stories on the state of the big-firm economy, new challenges for incoming associates, buying and selling a law practice, and living well on a public-interest law salary.

For Justice Ruth Bader Ginsburg, it must be a case of deja vu all over again, as Yogi Berra would say.

The Supreme Court, over her dissent Monday, upheld a provision of an AT&T Corp. pension program that had subtracted from the retirement plan’s calculation of seniority the time female workers took off to give birth. The court held in AT&T Corp. v. Hulteen that women who took leave before 1978 suffered no illegal discrimination because federal law did not equate pregnancy bias with sex discrimination in those days.

The justices, in a 7-2 vote, said the precedent back then was General Electric Co. v. Gilbert, a 1976 decision in which the high court stated that “an exclusion of pregnancy from a disability-benefits plan providing general coverage [was] not a gender-based discrimination at all.”

The Gilbert decision prompted Ginsburg — then a women’s rights attorney — to co-author a New York Times column urging Congress to amend Title VII of the 1964 Civil Rights Act and classify pregnancy discrimination as illegal gender bias. Congress agreed and enacted the 1978 Pregnancy Discrimination Act.

Now more than 30 years later, Ginsburg has returned to the fight, saying the current court has paid insufficent heed to the PDA.

“Congress put the court back on track in 1978 when it amended Title VII to repudiate Gilbert‘s holding and reasoning,” Ginsburg wrote on Monday, in a dissent joined by Justice Stephen G. Breyer. ”Congress’ swift and strong repudiation of Gilbert, the court today holds, does not warrant any redress for the plaintiffs in this case.”

Above the Law has a leaked memo from DLA Piper saying that the firm is cutting first-year associate salaries. DLA Piper confirms. Last year, the firm’s number was $160,000 in larger markets, including Baltimore. Now, the newest incoming associates will make $145,000 instead — when they actually start. Remember that DLA Piper, like many other firms, has delayed first-years’ start dates. Instead of starting work in September 2009, DLA Piper’s new lawyers will not report to work until January 2010, though they will get a stipend in the meantime.

The memo also says the firm will adjust salaries for other associates based on year and performance. The firm says partners, of counsel and senior counsel lawyers have also taken pay cuts.

The January issue of Baltimore Magazine includes its annual salary survey. (Quick aside: try saying “salary survey” five times fast.)

The story quotes salaries for various law types: Baltimore City State’s Attorney Patricia C. Jessamy makes $230,000 per year; Scott D. Shellenberger, her Baltimore County counterpart, makes $195,000 annually; and a starting lawyer makes an average of more than $92,000.

The last figure surprised John B. Bratt of Miller & Zois LLC, who wrote Monday in the Baltimore Injury Lawyer Blog that he made $35,000 when he started practicing a decade ago.

“I can’t believe the salary landscape has changed that much in the last ten years,” Bratt wrote, adding the figure “sounds awfully high.”

The magazine says in the story it arrived at its numbers through interviews, government documents, business filings and various Web sites, among other sources.

My colleague Caryn Tamber reported in May that eight large Baltimore firms were paying first-year lawyers more than $100,000 annually. In August, she reported a national study showed the median starting salary for the class of 2007 was $66,000, with a quarter of the class making between $140,000 and $165,000 and almost half making between $40,000 and $60,000.

My guess is the six-figure salaries are outliers that push up the average starting salary deceivingly high and that the median, a more accurate measure for a whole group, is more in line with Bratt’s thinking. (Full disclosure: I’m hoping my logic also applies to a reporter’s average salary of approximately $65,000 as quoted in the magazine.)

What do you make of the $92,000 starting salary for lawyers?

DANNY JACOBS, Legal Affairs Writer