Most general counsel who profess to control their outside counsel costs admire rebates or discounted hourly rates (See my post of April 23, 2006 on rebates compared to discounts; Oct. 31, 2005 on British practices and low-balling; but see my post of Sept. 10, 2005 on the scarcity of discounts in real life.). Discounts on standard hourly rates are as low-lying fruit as they are low value.
Nevertheless, general counsel persevere:
even though it is not possible to prove savings (See my posts of May 4, 2005; and Aug. 24, 2005 savaging discounts on hourly rates.);
even though the assumed benefits slip away over time (See my post of Dec. 19, 2005 on UTC’s experience.);
even though other methods have more effect (See my post of Sept. 5, 2005 on Citicorp’s GC and discounts.);
even though tiered discounts can warp usage of a firm (See my posts on tiered discounts of March 24, 2005; Aug. 13, 2006 on tiers not based on volume of fees; Nov. 22, 2006; and both Nov. 27, 2005 and Aug. 8, 2006 on retroactive application.);
even though discounts for volume favor larger law firms, which have higher base rates (See my post of Aug. 9, 2006.);
even though “standard rates” may be very slippery, like room rates in hotels (See my post of Sept. 4, 2005 and GE’s auctions.);
even though lawyers and others in law departments still have to carefully review bills (See my post of Sept. 14, 2005 on the time demands.);
even though firms continue to work on what remains essentially a cost-plus basis (See my post of May 26, 2006.);
even though law firms might seek compensatory concessions for granting a discount (See my post of Oct. 29, 2006.); and
even though the readiness with which firms concede discounts might cause general counsel to wonder about the actual savings that result (See my post of July 30, 2005 on 5-10% discounts being normal.).
It’s just too easy to command discounts and then bestride the aircraft carrier and crow “Mission accomplished!”