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Billing rate discounts that trigger with volume increases, even retroactively

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Many law departments review law firm proposals to grant increasing, step-wise reductions in rates. Give us more work and we will agree deeper cuts. For example, if the actual hours of work by the firm during a year multiplied by the firm’s rates amounts to $3 million plus, the firm’s discount will deepen one percent per million for any services above $2 million.

More dramatically, firms propose retroactive rate reductions. For example, assume the same $2 million projected level of services by the law firm. If the actual work done exceeds that amount by $1 million or more, a higher discount will take effect for ALL work done during the 12 month period – that is, the increased discount will apply retroactively to the preceding work.

The retroactive feature strongly encourages a law department to funnel more work to that firm so that the department can reap the savings on earlier work.

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2 responses to “Billing rate discounts that trigger with volume increases, even retroactively”

  1. What About Clients? says:
    August 14, 2006 at 8:10 am

    Seven Great Posts You Shouldn’t Miss.

    1. The Myth That Companies Hire Attorneys, Not Law Firms by Tom Collins. 2. How The Long Tail Applies To Law Firms by Larry Bodine. 3. Billing Rate Discounts That Trigger With Volume Increases, Even Retroactively by Rees Morrison. 4….

  2. What About Clients? says:
    August 14, 2006 at 8:55 pm

    Seven Great Posts You Shouldn’t Miss.

    1. The Myth That Companies Hire Attorneys, Not Law Firms by Tom Collins. 2. How The Long Tail Applies To Law Firms by Larry Bodine. 3. Billing Rate Discounts That Trigger With Volume Increases, Even Retroactively by Rees Morrison. 4….