Over the course of the last several weeks, Bodhala has fielded client requests for data-backed insights on how to handle law firm payables during COVID.
Despite the current economic situation, law firms continue to invoice clients at rates that are even higher than the previous year.
Knowledge is power. Bodhala equips your corporate legal department with the information needed to navigate these trying times.
Consider these suggestions from our team of legal experts when evaluating your department’s spend:
Are corporate legal departments paying outstanding invoices?
While every budget line item is being reevaluated, corporations have halted accounts payable in an effort to preserve working capital. In recent weeks, we have seen numerous businesses skip out on their rent payments, renegotiate vendor contracts, and cut executive salaries significantly.
As “The Great Retrade” takes shape across industries and corporate legal departments evaluate invoices with heightened scrutiny, law firms can no longer shield themselves from the negative effects of a crisis. Law firm invoices from the first half of the year are likely to be recut at the end of the pandemic.
Based on market data from recent years, Bodhala predicts that nearly $100 billion of invoices are currently outstanding. We project that only 50 to 65% of outstanding receivables from the first quarter of 2020 will actually be collected.
Can I renegotiate rates?
You should absolutely work with your law firm to establish new rates that reflect the current economic situation. Bodhala recommends restructuring all hourly billing models with significant adjustments to your current rate card – even if you currently receive a discount.
Rate cards have increased year-over-year, usually without explicit sign-off from the client. Consider implementing your last approved rate card as this can help your business realize savings of 15 to 20%.
How should I handle ongoing matters?
Pay close attention to the staffing on your matters, monitor associate and partner matriculation, and do not be afraid to ask for discounts – after all, it is your money. Any M&A transactions halted by COVID should receive significant dead deal discounts of 15 to 25% on accrued fees.
Is my law firm going to be around when this is all over?
With so much uncertainty still on the horizon, it is not guaranteed that your law firm will be left standing when this is all said and done. Should your law firm go under, make sure you can pivot accordingly to a backup firm that can handle any mission-critical legal services. Stay informed on your law firm’s performance during these unprecedented times by requesting an economic health statement. Do not let your company be the last to pay a flopping firm.
Bodhala is here to help.
Bodhala is your partner for optimizing your outside legal spend and holding your law firm accountable throughout these challenging times. Our platform and team of legal experts provides you with actionable insights to manage your law firm relationships, handing the reins back over to your corporate legal department.
We understand the critical need to conserve cash and run your legal operations efficiently throughout this crisis. To help, Bodhala has assembled the following complimentary offerings to assist companies in steering through the obstacles COVID has presented:
- Bodhala Legal Expert Consultation: Speak with a Bodhala legal expert about spend management during the pandemic. Our team will provide advice on spend freezing, how to communicate with law firms, and how to renegotiate your current rates. Sign up now
- Access to our Matter Based RFP Platform: Utilize our RFP platform for three months. During this time, we will provide your corporate legal department unlimited access to Bodhala’s cloud-based RFP platform to run unlimited matter based RFPs. Our goal is to help you contain, reduce, and manage outside counsel costs. Get started
- Benchmarking Report: Built off Bodhala’s proprietary dataset, our benchmarking report will provide your company with a comprehensive report outlining what you currently pay your law firms versus what you should pay your law firms. With over $15B in invoice data from over 235,000 lawyers across 31,000 law firms, Bodhala ensures you get the right lawyer at the right law firm at the right price. Sign up now
Contact us to learn more about our complimentary offers [email protected]