Author: Onit

Article Highlights:

• “The Great Retrade” is happening across a number of industries, affecting companies big and small.
• For the first time ever, law firms are unable to avoid the shared economic struggle and must participate in “The Great Retrade.”
• Some firms will find themselves at risk during COVID-19.
• Law firm’s clients are deferring payments and halting work.
• Bodhala predicts significant renegotiation of legal bills during and after COVID-19.

“The Great Retrade”

As COVID-19 continues to devastate our economy, “The Great Retrade” is taking shape for companies big and small.

From the real estate industry to airlines, insurance, and hospitals – every line item in a company’s budget is being retraded in an effort to stay afloat amidst the chaos. This is reported all day in the financial papers and television.

Less well known is that Bodhala’s data has shown fewer bills being paid throughout March and April and we’re hearing first-hand the struggles on our Client Success calls.

Although they’ve historically sheltered themselves from previous crises, law firms must now also share in the pain each of the aforementioned industries is experiencing. Let’s take a glance at the new realities companies are facing.

Law Firms:

Our law firm health models are projecting financial troubles in the second half of 2020 for the top firms dependent on M&A due to the slowdown in global and private equity M&A that began in March. Given these firms’ dependence on such matters and the high profit yield these present, much will depend on the firms’ lines of credit with their banks.

Bodhala predicts a significant number of the first half of 2020 legal bills will be recut at the end of COVID-19.

Court closures, holds on settlement conversations, and a loss of new deals have left law firms with no choice other than to reduce their staff and payments.

Cadwalader, Wickersham & Taft LLP has cut associate salaries by 25 percent while partners are no longer receiving compensation. 

Pryor Cashman LLP has furloughed some associates, a once unprecedented thought, although the firm expects to bring them back in the near future.

Baker Donelson slashed compensation for associates and staff by 20 percent as they realize that law firms have become an afterthought with clients halting the firm’s current work and deferring payments.

Real Estate:

At the start of each month, there’s one thing on landlords’ minds – rent checks. However, the coronavirus has thrown a wrench in this expectation as renters struggle to make their payments. Through the end of the first week of the month, one-third of American renters had not yet sent in their rent check. 

Think it’s just your average Joe struggling to pay rent? Think again. Here’s a quick rundown of how some corporate giants are handling April rent –

Nike is renegotiating leases as they closed stores last month and anticipate the closure carrying on for the foreseeable future.

Petco paid 25% of their April rent and stated in a letter to landlords that the payment was made “under protest and duress in anticipation of potential future withholding.”

Ross Stores have halted rent payments while stores remain closed. Once stores reopen, they’ll pay rent equivalent to roughly two percent of sales until their sales reach 70 percent of the revenue received at the same period in 2019.

WeWork is individually reaching out to its roster of over 600 global landlords as the co-working company has halted rent payments at several US locations and alternatively looks for an asset-specific solution to benefit both parties.

Equinox, though to the dismay of owner Related, has advised landlords that the luxury fitness company will not be paying April rent.

Subway, prior to the start of the month, alerted their landlords that they will reduce or postpone their April rent payment. Additionally, the fast food chain is cutting royalty payments in half.

Insurance:

With shelter-in-place orders in effect and Americans buckling down at home, auto-insurance carriers are citing a dramatic drop in accident claims as mileage was down between 35 to 50 percent across the US. 

As a result, some auto-insurance carriers are making the move to payout the anticipated amount of claims they expected to send customers this year – even though they no longer have to.

AllState is issuing over $600 million in shelter-in-place checks to customers as the company looks to provide help when it’s needed most. 

American Family Insurance followed suit as it’s returning $200 million to its policyholders.

Additionally, many insurers have extended payment plans and waived late fees to ease up on the financial qualms Americans are experiencing during COVID-19.

Air Travel:

The vaporization of air travel during the coronavirus pandemic has airlines scrambling to make up for lost revenue.

United and Delta have reached out to their respective credit partners to discuss selling miles ahead of schedule and at a steep discount. 

Delta Airlines pledged a number of airplanes for a $2.6 billion credit line from banks as the airline continues to burn through $60 million a day.

American Airlines arranged a $1 billion loan led by Citigroup which included a second mortgage on its most valuable route – New York to London Heathrow.

Hospitals:

As if hospitals weren’t already overwhelmed enough – they’re facing the overarching issue of increased expenses at a time of little to no revenue.

Hospitals across the nation are in the process of increasing ICU bed count, a necessary yet costly task. Bringing a regular hospital ward up to ICU level entails the implementation of expensive equipment such as heart monitors, oxygen monitors, and ventilators. 

Along with equipment, hospitals are increasing staffing as they care for the drastic number of COVID-19 infected patients. 

Hospitals, including Cedar Sinai and Harbor-UCLA in Los Angeles, have cut back on lucrative elective procedures in order to make more room for those affected by the coronavirus. 

This will result in a loss of millions of dollars of revenue at each hospital. 

Pay Cuts:

In an effort to conserve cash during the crisis, company executives are taking pay cuts up to 100 percent as they navigate the uncertain COVID climate.

Disney executives have taken pay cuts up to 30 percent with no definitive end date. Company Chairman, Bob Iger, has passed up his salary entirely as Disney furloughed over 43,000 employees.

Boeing CEO, Dave Calhoun, and Board Chairman, Larry Kellner, are both foregoing their 2020 salaries. 

GE CEO, Lawrence Culp, has given up his full salary while David Joyce, the company’s Vice Chairman and President and CEO of GE Aviation will forego half of his salary. 

Lyft co-founders, Josh Zimmer and Logan Green, have pledged to donate their salaries through June.

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Informed decision making is more critical than ever as you manage expenses throughout this economic turmoil. Don’t let your business make the mistake of shelling out more money than you need to. Bodhala is here to help by providing real transparency, real accountability, and real control. 

Dear Friends,

We’re excited and proud to announce our new branding and logo. It marks the next phase in our journey and a new opportunity to deliver groundbreaking legal technology solutions to in-house legal teams.

You’ll see it’s not just our logo that’s changing. We’ve changed our website, our social media, our messaging, and our focus to better reflect the way we help our clients succeed.

It’s an exciting era for Bodhala — our steady growth has brought new clients, new teammates, and new products that are reimagining the legal services marketplace. By providing legal market intelligence, insights, and guidance to corporations, we’re able to help them optimize their legal spend and maximize their relationships with their law firms. 

Since signing our first client in 2016, we have seen multiple new trends surface in the legal industry, but we’re the first and only technology company that provides corporate legal departments with the “source of truth”  — real time, actionable data that unmasks law firm pricing and inefficiencies, empowering corporations to drive value on every dollar of legal spend.  

Our continued mission is to empower teams to analyze, interpret and optimize outside counsel spend, trailblazing a new era of legal market intelligence with real transparency, real accountability, and real control.

If you want to learn more about our product stack and legal market trends, I encourage you to visit our new website where you can sign-up for our webinars, check out our blog and industry-specific case studies. 

As always, if you have any questions, please don’t hesitate to reach out! Until then, we’ll keep working tirelessly to bring value to legal departments all over the world.

Sincerely,

Raj Goyle, CEO

Friends, Colleagues & Partners,

The COVID-19 outbreak is an unsettling time. Our sincere hope is that you are healthy, safe, and secure during this extraordinarily challenging period. As the situation has unfolded these past few weeks, and as we continue to work remotely, I wanted to briefly share how Bodhala has acclimated and performed. 

Our crisis-management plan has exceeded expectations to date — I will continue to monitor developments closely.  

I am grateful that our Client Success, Tech, and Product teams have been able to deliver all of our work seamlessly and on time. Specifically, Bodhala has taken the proper precautions to ensure the following:

• Each Bodhala team member is secure and safe while working remotely. All employees are fully equipped with the technology required to continue working on all client matters without disruption. Key employees assigned to your company’s matters have complete access to all pertinent information needed to execute their work.
• The Bodhala platform is secure and will not experience any data interruptions. Invoice data will continue to be ingested on its regular cadence and your team will have uninterrupted access to the cloud-based Bodhala platform.
• Although working remotely, productivity has not diminished – in fact, many team members have expressed higher productivity levels during this time. Each employee is working efficiently and tirelessly on all business matters. We stand at the ready to support you and your team.

To guarantee we stay focused on the tasks at hand, I convene our senior leadership team twice daily to provide updates on each team’s work and to address any concerns that arise. We pay very close attention to the health — physical and mental — of each employee.

In these uncertain times, finding efficiencies in your enterprise’s spend categories has never been more urgent. Bodhala is here to help you. 

Our team continues to lean into our work and we are more passionate than ever about the service and success we provide to you. We remain intently focused on our mission to deliver groundbreaking legal technology solutions to empower you to analyze, interpret and optimize outside counsel spend.

We are incredibly grateful for your partnership and continued support. Together, we will navigate this uncertainty and come out stronger because of it. Should you have any questions or concerns, please do not hesitate to reach out to me directly.

Thank you.

Sincerely,

Raj, CEO