…is a quote from the 2018 Buying Legal ‘Procurement Survey‘ that I took the time to read over the weekend.
This report makes for a fascinating read, not least the fact that ’72 percent of organizations are currently using panels/preferred provider lists’ and that ’25 percent are planning to use them in the future’ [Takeout tip:- best to invest in a really good tender team. Something that we in #Auslaw have always under invested in].
Anyhow, one of the quotes of the report is “Who still pays sticker price?”
my take, for what it’s worth, is that nobody does.
Leaving aside the fall in realization rates we see continue to see every year in reports such as the one published by Altman Weil (what are we at this year – 83%?), the rise of so-called AFAs currently used by “65 percent of survey respondents and another 31 percent are planning to use it” means that even if the ‘billable hour’ isn’t dead yet, the hourly rack-rate certainly is.
But the point of this post – as is a common theme here on my blog posts – goes to the use and, importantly, effectiveness of ‘discounts’.
One of the graphs in the report shows that a massive 88% of respondents negotiate discounts with their legal service providers and that a further 8% plan to use this tactic in the future.
While totally believe, this is also an unreal stat (think about that for a second: 88% of clients are saying you are not worth what you think you are worth!).
But – and here’s the crux, when asked the “average effectiveness” of the various fee negotiation options available to them, the client preferred option of negotiating discounts did not come top.
Not even close.
The most effective was negotiating AFAS.
And the second most effective way of ensuring that your law firm delivers on time and on price?
– ‘pre-matter Scoping of Work’
Well there’s a surprise – properly scope a matter and implement legal project management and, odds on, you’ll have a satisfied and happy client that isn’t asking you for a discount – is probably happy to pay you hourly rates – and is giving you repeat work.
What more could you want!