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Let me count the ways we handle discounts

Law departments have at their disposal many variations on the old standby of rate discounts (See my posts of Aug. 4, 2007 with a discount and a success-based arrangement; and Oct. 29, 2007 on expectations.). I’ve collected some ideas and associated posts.

1. Across-the-board discounts imposed on all law firms for a period (See my post of Nov. 11, 2007 where I criticize one-size-fits-all solutions.).
2. Discounts that increase as the amount of work done increases (tiered discounts) (See my posts of Aug. 8, 2006 on tiered discounts from hourly rates; and July 2, 2007 about percentage increases.).
3. Tiered discounts that have retroactive affect in that once a new level of fees are reached a discount at a higher level applies to the earlier amounts paid (See my post of Aug. 8, 2006.).
4. Discounts according to the sophistication of the work, such as patent applications (See my post of May 23, 2007.).
5. Discounts that vary by groups of timekeepers, such as higher discounts on first-, second- and third-year associates. Perhaps there is no discount on partners, because you want them working on your matters.
6. Discounts that vary by the period of enforcement (See my post of May 26, 2007 on term periods.).
7. Discounts based on profit margin (See my post of Jan. 10, 2008.).
8. Prompt payment discounts (See my posts of June 11, 2007; and Oct. 25, 2007 in their infrequency.).
9. Discounts based on the average effective billing rates, so that firms with higher rates take deeper discounts than firms with lower effective rates (See my post of June 13, 2006 on the difference between blended and effective rates.).

After all this, consider how you want your law firms to indicate on their bills the discounts they grant (See my post of Jan. 10, 2008 on how firms show their discounts.).