In each recent crisis – the dot-com collapse, the 9/11 attacks, the Financial Crisis – we have seen industries take major hits, adapting to the fiscal reality each has presented, and sharing in the pain. However, there is one group that has historically been exempt from the shared cost of these crises – the legal industry.
During each of these monumental crises, law firms established themselves as essential to the fate of your business as you navigated the uncertainty. In doing so, the industry maintained its pricing and performance almost seamlessly – even during times of economic peril.
Take a look back at the 2009 financial crisis. While the lack of cash flow ran rampant in other industries, law firms experienced stability and even increases in their profits per partner (PPP). The top three firms grossed PPP of $4.3 million, $3.13 million, and $2.965 million respectively according to the AmLaw 100 rankings.
In case you forgot, this was during an economic crisis. Sounds unfair, right?
Though they have gotten away with it in the past, the discrepancy in legal market income and market forces is no longer acceptable. As companies struggle to navigate their new reality, law firms are seeing an influx in their workload.
In a survey recently conducted by the Association of Corporate Counsel, over 10% of in-house lawyers, general counsels, and chief legal officers shared that they are outsourcing more work than usual to law firms as they look for additional support during the crisis.
If that is the case, wouldn’t you like to make sure you are hiring the right firm at the right price?
Good news – Bodhala is here to help you do just that.
It is now more urgent than ever to find efficiencies in your spend categories and to hold your law firm accountable for their fees.
Bodhala was built on the foundation that the legal market is not special – it is just like any other sophisticated market service and should act accordingly through economic undulations.
Our platform refines organizational processes by empowering your legal team with deeper insights that allow you to better analyze, interpret, and optimize outside counsel spend.
As the coronavirus pandemic has unraveled the past several weeks, we have witnessed the rapid downturn of our economy. It has left companies to retrade every billing line item – from real estate, to employees, to insurance. Companies are holding their bills, deferring payments, and renegotiating leases.
Among some of the largest industries to take a hit are airlines and real estate.
Air travel has almost completely dissolved with US carriers cutting about 70% of flights this month. As a result, major US airlines including Delta, JetBlue, Southwest, United, and American applied for government aid in hopes of receiving a grant authorized through the stimulus package.
Even with government assistance, Delta Airlines projects those funds only lasting until June as they burn through $60 million a day. The airline expects Q2 revenue to be down by 90 percent from 2019 and continues to add to the 35,000 employee volunteers taking unpaid leave.
Travelers aren’t the only ones staying away from the airline industry.
Aircraft leasing investors, who once enjoyed hefty returns, are now dispersing left and right as dividend payments are suspended and payment schedules are renegotiated. 80% of Avalon Holdings Ltd. customers, one of the world’s largest plane lessors, sought payment relief within the past week.
Mass workforce layoffs have Americans strapped for cash and unable to make payments on time, or at all. As the first of the month approaches, many Americans are unprepared to make their rent payment with housing advocates in New York pushing for a statewide rent strike on May 1.
It’s not just your average American that is worrying about making rent. Co-working giant, WeWork, halted rent payments at several US locations as “the great re-trade” begins to take shape in the real estate market. The company is looking for an asset-specific solution that benefits them and their over 600 global landlords.
Luxury fitness company, Equinox, recently issued a letter to their landlords to let them know that they should not expect the chain’s rent check at all. Equinox is temporarily not paying their vendors and they recently furloughed a number of employees.
Here is some food for thought:
If Delta Airlines can barely pay their employees, if WeWork has to renegotiate their leases, and if Equinox isn’t paying their rent or vendors – isn’t it time for you to rethink paying that hefty legal bill?
Bodhala is reimagining the legal services marketplace by providing legal market intelligence, insights, and guidance to corporations to optimize their legal operations. Our current economic climate makes the need to take control of your spend more critical than ever before.
Our platform provides you with actionable insights to manage your law firm relationships and equips you with the logic needed to execute legal operations efficiently and effectively. Real transparency, real accountability, and real control.
As part of an ongoing series, we will be covering topics ranging from tactical “dos and don’ts” to navigating law firm payables and everything in between.
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Download our free whitepaper to get data-backed and time-tested guidelines for understanding your RFP responses. You’ll also see a real-life example where our data saved a global bank millions on their rate negotiations.
Shoot us an email at [email protected], and let’s talk about how to get started.