Wolters Kluwer’s ELM Solutions is proud to once again participate in Legalweek(year), which in 2021 will be presented as a virtual event from February 2 through 4. Nathan Cemenska, our Director of Legal Operations and Industry Insights, will join expert legal professionals from Discovery Education, Applied Materials, and Lowe’s Companies for a session called Rate Negotiation Secrets: Why There is Variability Among Purchasers of Outside Legal.
Outside counsel rates vary greatly from client to client. In fact, there are some corporate legal departments (CLDs) that pay a mean law firm rate almost 60% lower than their industry peers. This session will dive into the ways CLDs can understand the rates they are paying in comparison to their peers and what they can do to make sure they are not overpaying.
The discussion will be backed up by data points from our LegalVIEW® database, along with supporting data from other sources, including the Altman Weil Chief Legal Officer Survey. Here are a few of the key points that the panel will touch on:
- Often, CLDs pay less to outside counsel when they send their firms a high volume of work, but that’s not always true. Although it may be counterintuitive, our LegalVIEW data shows some CLDs pay lower law firm rates even when their volume is low. And others pay higher rates than average despite a lot of work for their firms. The session will cover the reasons for both of these circumstances and how to make sure you stay on the right end of the spectrum.
- About half of survey respondents reported that they received an average price reduction of 6% to 10% off standard rates from their firms. Every year since 2015 has seen a median reduction of 10% among all respondents, with many receiving deeper discounts. Among the questions raised by this data: Are the standard rates really standard if very few CLDs are paying them? How can you identify a better baseline comparison for the rates you negotiate?
- Law departments report that they have negotiating power over more than three-quarters of outside counsel fees. CLDs consider only about 22% of fees to be for work so important that costs are not an issue. And more than half of the negotiable fees are thought to be subject to “significant negotiating power.” That means most departments could reasonably expect to attain reductions on a very substantial portion of rates, offering a major positive impact on overall spend.
- The most significant perceived obstacle to greater discounts is “not enough buying power to negotiate more effectively.” If law departments had a stronger footing in their negotiations with firms, they would expect to realize greater saving on their outside counsel costs. So, how do you develop that buying power? And how do you overcome law firm resistance, the second most cited obstacle?
In this session, you will hear from veteran pricing experts who can help you determine whether your rates are on target. And if you are paying higher or lower rates than normal, they can help you identify whether there are good reasons for those differences. The panel will also cover strategies for achieving the most competitive rates and ensuring that your department stays on the right side of the statistics. In addition, attendees will be able to download a rate management best practices checklist to help them understand the tactics that are most effective when working to win the best rates from firms.
Visit Legalweek(year) to register and attend Rate Negotiation Secrets: Why There is Variability Among Purchasers of Outside Legal on Wednesday, February 3.