Blog

Law Firm Plea: I Want You to Want Me

When Law Firms Offer Discounts

So why would a law firm offer significant discounts to their rates to secure an engagement?  The answers are varied and are not necessarily predicted easily from engagement to engagement.  The good news:  there are several reasons law firms may be willing to offer significant discounts to win your work.

  1. Low Utilization – The inventory a law firm sells is time.  Yes, you are buying their expertise, but as a service business no matter what fee arrangement they use in billing you, the measurement of their profits will be based in money received for time worked.  When a law firm can’t fully utilize its staff, its profitability suffers.  So when times are slow a law firm may be willing to offer you steeper discounts to secure an engagement.  Something for their time, after all, is better than nothing for their time.
  1. Inroads for a New Relationship – A law firm that wishes to establish a deeper relationship with your company may be willing to provide you with a deep discount on an initial engagement in order to gain greater understanding of your business and display their capabilities.  In doing this they will sometimes seek assurances that you will engage them again at rates that more closely mirror their standard fees.
  2. Maintenance of an Existing Relationship – Incumbent law firms that are under pressure from market competition will sometimes provide significant discounts on work they’ve historically performed to secure their position.  Reluctance to this type of concession is also common as the firm will not lightly erode the base rates it has historically charged the client.
  3. Young Partners Seeking to Secure Work – Younger partners attempting to build a book of business may be more inclined to offer significant discounts than attorneys with established books of business.  This can even be true for personnel within firms that have established relationships with your company.  In short, you can’t always be certain who is given credit for fees received from particular clients.
  4. New Work Flows For an Established Firm – A firm that has historically provided service for your company in one area may be willing to provide a significant discount in order to gain additional work in new areas.
  5. Certainty of a Longer Term Engagement – When a longer term, significant engagement is on offer, the likelihood law firms will offer significant pricing concessions increases.  The certainty of meaningful workflows adds stability to their revenues.
  6. Risk Reward – For certain types of engagements law firms may be willing to undertake significant “risk sharing” fee arrangements with a client.  For instance, a very high profile item of offensive litigation might see the firm offer a steep discount to standard hourly rates that is coupled with a significant success fee in the event the case achieves certain results.

About the author – Dave Sampsell is a 20-year lawyer with extensive experience managing large, complex legal engagements and overall corporate legal budgets.  He presently serves as General Counsel of a NASDAQ-listed company and is a Founder and Director of BanyanRFP.  BanyanRFP saves companies time and money through an easy-to-use, private and secure online application for the creation and processing of legal services RFPs.  For more information, visit www.BanyanRFP.com

Back to top