Six advantages of discounts off standard rates compared to other cost-saving efforts

For a general counsel, discounts from standard billing rates enjoy some evident advantages over other methods of managing external costs

  1. A discount is easy to describe to fellow executives. “We knocked 10 percent off the firm’s rates” needs no further discussion.

  2. It is easy to calculate the presumed savings. “Ten percent times $1.5 million in pre-discount fees means we saved $150,000.”

  3. Law firms understand immediately how to respond and don’t need projections, assumptions, or even facts. “OK, we’ll give you ten percent off our normal rates.”

  4. The discount appears clearly on the law firm’s invoices. “Total fees, $40,000. Minus discount of 10% ($4,000) equals $36,000.”

  5. You can compare discount levels without any calculations: “The 10 percent we got is larger than the 7 percent you got.”

  6. Discounts are adjustable and fine-tunable. “You discount your bills 10 percent, except anti-trust work has no discount and workers comp has 15 percent.”

  7. You can impose discounts at the drop of a hat. “Effective today, all law firms will apply a discount of ten percent.”

Small wonder discounts are the most-favored ration (See my post of March 11, 2007: increased frequency of discounting; Aug. 15, 2008: percentage of bills discounted; July 16, 2005: one of three most common cost-control measures; March 5, 2009: de facto crazy quilt of discounts; and April 16, 2007: volume fee discounts at McDonald’s for workers comp.).

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