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Five -ten percent discounts as matter of course?

For several years I have thought that law firms would grant their significant clients discounts of five to ten percent without batting an eyelash. Even more do I suspect this to be true after finding out that a large British firm, having disclosed its financials, battens on a profit margin of 36 percent. [See my post of July 20, 2005]

To my surprise then, when in a recent project we looked at the total fees paid to the 25 law firms paid the most, we found that a major company obtains an overall discount of a measly two percent. Two-thirds of its primary firms had granted no discount whatsoever during 2004. Were this law department to mandate a mere five percent across-their-board discount, it would save well over a million dollars. Not that I subscribe to discounts as the panacea for cost excesses, but the mathematics are quite simple.