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Various ways to handle discounts given by law firms

Close to 40 posts on this blog have to do with discounts granted by law firms (See my post of Nov. 26, 2006: discounts with 15 references; Jan. 21, 2008: 10 more posts with variations on discounts; and Dec. 26, 2008: third metapost on discounts, with 12 references.). What I haven’t written about are the multitude of ways legal departments can manage the discounts once granted.

One method calculates the discount once the year has ended. The law firm then generates a credit for the coming year or remits the amount due to the department.

A second method contemplates such a reconciliation quarterly or semi-annually.

By another method, the law firm applies the discount to each bill, which means the firm keeps track when tiered discounts take effect. My impression is that this method is the most common.

A fourth method relies on e-billing system to calculate the discount and when the tiers trigger.

Somewhere, I suppose, the accounts payable department applies the discount and pays the net amount due, but that sounds problematic in terms of the legal department tracking its expenditures.

Finally, and least desirably, the lawyer who reviews the bill calculates the discount. The flaws in that system are apparent.