Purchasing power is the single most potent form of leverage available to a company that wants to keep law firm fees within manageable bounds. But passive acceptance — not robust negotiation — is corporate Legal’s typical response to law firm price demands.
In the 1st Quarter of 2023, predictions of the largest law firm rate increases in 15 years abound — see here (“Those Predicted Big Biglaw Rate Increases? They’re Going To Be Bigger” / Above the Law 1.19.2023 — 7-8% increases in 2023), here (“Raising Billing Rates in 2023 Becomes ‘Singular Focus’ for Law Firms” / Law.com American Lawyer Media 11.22.2022 — 7-8% increases in 2023), and here (“Rising Rates are Law Firms’ Salve Amid Layoffs, Pay Cuts” / Bloomberg Law 1.19.2023 — 8% increases in 2023).
2023 is not the year for your company’s Legal function to be pushed around in such rate negotiations. Those who bargain on behalf of your company should do so keenly aware of market demand vulnerabilities now facing law firms on the other side of the table from them. Continue reading