Category: Legal Operations

This afternoon, Bodhala participated in Consero’s Legal Operations virtual conference.

Bodhala CEO, Raj Goyle, led legal operations leaders across industries through a series of conversations on how to drive impact within their legal departments amidst COVID, the techniques legal departments are implementing to adjust for the future and save money, and how in-house teams can push their diversity initiatives both internally and externally.

Here are our key takeaways:

Data is driving how law firms are managed.

• With the challenges 2020 has presented, legal operations professionals are looking to utilize data to manage law firm relationships. But it can be challenging to know where to begin, especially if the data is messy. Attendees expressed the need for convincing and compelling data that can initiate conversations on law firm selection, rate cards, bill reviews, number of firms utilized, overall spend, and more. Take a look at our recent whitepaper to understand how our clients’ legal operations teams have leveraged data during COVID.

Finance is closely tracking legal spend.

• As companies continue to grapple with the economic effects of COVID, it’s no surprise that finance departments are examining invoices and legal spend with heightened scrutiny. The pressure to cut costs is on as attendees noted increased interaction with their finance teams, sharing that every nickel and dime going out the door is being tracked and invoices over a specific cost threshold are being questioned. Learn about Bodhala’s suggested techniques for handling law firm payables during COVID.

Diversity standards are being set internally and externally.

• The urgent, overdue conversation on racial injustices in America has led corporate legal departments to not only turn the lens on themselves, but on their law firms as well. Attendees noted their efforts to examine the diversity (or lack thereof) of the lead attorneys at their panel firms, gather data to track the diversity of the timekeepers handling their matters, and collaborate with their Chief Diversity Officers on moving the needle on key initiatives. As law firms are hesitant to comply with requests for diversity data, clients must track origination credit as this is what can truly improve diversity in the legal profession.

Bodhala’s Insights

Whether you’re looking to cut costs, improve your department’s decision-making process, or drive key diversity initiatives – are you armed with the data needed to do so?

Bodhala is reimagining the legal services market place by providing legal market intelligence, insights, and guidance to corporations to optimize their legal operations. 

From top timekeepers to average hourly rates, and everything in between, all you need to know about your outside counsel spend and law firm staffing is housed in your data. 

Bodhala equips you with the data needed to hire the right lawyer at the right law firm at the right price.

Our platform’s insights have enabled clients to initiate data-driven conversations both internally and externally. With Bodhala, corporate legal departments have the power to justify their objections, negotiations, and decisions as they relate to legal spend, law firm selection, and diversity goals.

Bodhala’s Resources 

We’re here to help you find efficiencies in your company’s legal spend – speak with a Bodhala legal expert about legal spend management tactics.

This afternoon, Bodhala participated in Consero’s virtual conference – Legal Operations for Financial Services and Insurance: What’s Next for Legal Ops?

Bodhala CEO, Raj Goyle, led legal operations leaders from financial services and insurance companies through conversations on how our clients have leveraged our platform’s data throughout the COVID crisis, where gaps may lie in their current analytics tools, and how peer departments across industries are utilizing data to drive decisions and change.

Here are some of the key takeaways from the sessions:

Data drives action.

• As echoed throughout the conference, legal operations professionals depend on data to drive conversation and action within their legal departments. Several attendees noted issues with the “dirty data” other systems produce. One attendee, a Director of Legal, noted that a lack of clean data has left his legal department unaware of what actions to take when it comes to spend and outside counsel relationships. As a result, his team approves all rate cards submitted by law firms without even giving it a second thought. Without context behind data and true apples-to-apples comparisons, in-house legal departments are left to play guessing games when it comes to outside counsel rates.

Let lawyers focus on lawyering.

• The COVID crisis has led companies to evaluate every single line item in their budget with heightened scrutiny. As corporate legal departments look to contain costs, many attendees noted that managing relationships with outside counsel is critical. Throughout the conversation, attendees cited the various “key players” they bring in to handle the financial relationships with their outside counsel, including general counsels, legal operations, and procurement. This has allowed their in-house attorneys to focus on mission-critical work rather than handling law firm negotiations. Attendees have turned to data to evaluate their law firm relationships to determine the value these firms are providing for the rates that are being paid. One Legal Operations Manager shared that she has started to pry her in-house team with the following question, “If a firm cannot adhere to the outside counsel guidelines, are you prepared to break the relationship?” Another attendee, a COO, added that he recently downsized his company’s number of law firms from 300 to 30 over 18 months to optimize spend.

Sophisticated technology delivers real results.

• As the maturity of each legal department varies, so does the sophistication of the technology they use. Other tools, such as e-billers and Tableau, can only go so far when delivering data and analyses. A Managing Director and Deputy COO shared that e-billers are limited by a lack of financial acumen which makes rate management a difficult task. Another attendee, a Head of Global Operations, noted that e-billers are only as good as the data you put into them, adding that they are “flat-files” that do not operate on sophisticated algorithms, as Bodhala does.

Bodhala’s Insights

Bodhala is reimagining the legal services market place by providing legal market intelligence, insights, and guidance to corporations to optimize their legal operations. 

From top timekeepers to average hourly rates, and everything in between, all you need to know about your outside counsel spend and law firm staffing is housed in your data. 

We arm you with the data needed to hire the right lawyer at the right law firm at the right price.

Here’s how our client’s legal operations teams have leveraged our Bodhala’s data and guidance recently:

Client A

Challenge: An insurance carrier was utilizing thousands of firms, but didn’t have a sustainable way to provide meaningful feedback on firm cost and quality on a regular cadence.

Action Taken: Bodhala instructed their corporate legal department to use Bodhala scorecards to score their most used firms, creating true apples-to-apples comparisons that could be shared with the law firms.

Client B

Challenge: A financial institution’s law firm rates were consistently increasing above inflation. The company’s legal team did not have the capacity to negotiate rates while collaborating on mission-critical work.

Action Taken: Initiated the handoff of rate card negotiations to finance and procurement, joining a number of leading companies that allow their legal departments to focus on being lawyers.

Hercules, “the god of analytics” is Bodhala’s trailblazing proprietary database that operates as a single source of truth for legal data, and provides our clients with a 360° view of the legal market.

Running on Hercules, the Bodhala platform has an intuitive dashboard that analyzes:

• Rates
• Observed discount percentages at relationship and practice area/work type level (anonymized)
• Matter types
• Factors that create peer sets, providing accurate apples-to-apples comparisons of cost and staffing

Our platform’s insights have enabled clients to initiate data-driven conversations both internally and externally. With Bodhala, corporate legal departments have the power to justify their objections, negotiations, and decisions as they relate to legal spend and law firm selection.

Bodhala’s Resources

We’re here to help you find efficiencies in your company’s legal spend – speak with a Bodhala legal expert about legal spend management tactics. Our team will provide advice on how to communicate with law firms, how to renegotiate, and what to look for in your law firms. Sign up for your complimentary consultation.

Since the start of the COVID crisis, we have posed the following question to our clients – How is your law firm sharing in your economic pain?

Looks like we were right in doing so.

According to a recent Financial Times article, private equity firm, KKR, asked its law firms, which include the likes of Simpson Thacher & Bartlett, to “share in their economic pain” by providing discounts of at least 15% on work completed this year.

This, coming from one of the most prominent consumers of complex law firm work, shows that law firms can no longer avoid the negative economic effects of a crisis.

This has set the trend for other private equity firms to follow.

Despite initially calling the request “galling” and “outrageous,” most advisers have accepted KKR’s request.

Many Bodhala clients have made similar requests to their law firms. This goes to show that even long-term law firm relationships are at risk if these firms are unwilling to participate in ceding some profits on rates – especially when those rates have increased at above-inflation for decades, as shown through our contribution to this WSJ article.

As “The Great Retrade” has taken shape across industries, this news did not come as a surprise to Bodhala.

From the real estate industry to airlines, insurance, and hospitals – companies have carefully reevaluated and retraded every line item in their budgets in an effort to stay afloat amidst the chaos.

Historically, law firms have sheltered themselves from the negative effects of past crises. From the dot-com collapse to the 9/11 terrorist attacks to the 2009 Financial Crisis, law firms emerged unscathed from the crushing impacts these events had on our economy.

Bodhala predicted that things would be different this time around.

And so far, we have been correct.

Even the most prominent private equity firms, regardless of their balance sheets, are experiencing cost pressures due to the economic slow-down, and they are demanding that their business partners share in the burden.

KKR’s request to law firms came from CFO, Robert Lewin, as the private equity firm has spent roughly $18 billion on deals since February 2019.

After reporting a net loss of $4.2 billion in their first quarter of 2020, KKR was left with few options but to direct their cash conservation efforts towards their law firms.

And they’re not alone in doing so.

As corporate legal departments try to optimize their spend, law firms are receiving more and more “IOUs” from their clients.

Heading into the second quarter of the year, law firms projected an 8% lengthening in collections as their clients carefully monitored their accounts payable.

Since the start of the economic downturn, Bodhala has fielded client requests for data-backed insights on how to handle their law firm payables during COVID.

It appears the following advice we have offered our clients is reverberating across corporate legal departments:

• Renegotiate fees and freeze your rate cards
• Examine law firm invoices with heightened scrutiny
• Run matter RFPs to explore high-quality alternative firms at lower rates
• Hold off on paying your legal bills
• Ask for higher broken deal discounts
• Freeze staffing on litigation
• Evaluate your law firm’s economic health

KKR’s request is resetting the market, leading us to ask:

If one of the largest private equity firms in the world is safe-guarding their legal spend, shouldn’t you be doing the same?

Bodhala’s groundbreaking legal technology platform provides the data needed to optimize your spend on outside counsel.

Across industries, our clients have leveraged our platform’s insights to drive real, actionable change within their legal departments.

To help you with these issues we have created this free form letter for you to download to start the conversation with your law firms.

Subscribe to our blog to stay up-to-date on our follow-up content, including advice on how to handle law firm objections.

As corporate legal departments deal with the effects of COVID and begin to address the potential long-term impact on their business, Bodhala’s team of legal experts presented a complimentary webinar to guide attendees through various cost optimization strategies.

Hosted by Ketan Jhaveri, Bodhala’s President, and Chris Bennett, VP of Strategy, the pair dove into the challenges our clients have faced throughout the crisis and how they leveraged data and Bodhala’s platform to pivot accordingly.

From real estate to airlines, insurance to hospitals, we have witnessed “The Great Retrade” take shape across industries as companies try to conserve cash.

Jhaveri and Bennett explained that, historically, law firms have sheltered themselves from the negative impacts of crises, continually charging inflated fees while other industries suffer immensely. 

So why does this matter to you?

“With the shift in supply and demand, you need to keep a watchful eye on the billing practices conducted by your panel firms,” noted Bennett. It is now more important than ever for general counsels and legal operations professionals to protect their business from financial oversight and poor panel firm management.

Jhaveri posed the following question to the audience, “How is this downturn impacting your law firms and your work being handled by those firms,” adding “If they’re hounding you for an unpaid invoice, it’s likely things need to change.”

Data is the key to driving this change.

At Bodhala, we’re providing legal departments with the data they need to not only optimize their spend, but to justify it. 

Jhaveri added, “Law is not always about getting the lowest price – you do pay for quality and accessibility – but it is also about allocation and ensuring you’re hiring the right lawyer at the right law firm at the right price.”

Our team identified seven keys areas where general counsels and legal operations professionals leverage data to manage cost pressures within their legal departments, including:

1. Rate Cards
2. Matter RFPs
3. Litigation
4. Broken M&A Deals
5. Law Firm Health
6. Invoice Payments
7. Bill Review

Here are some interesting discussion points from the webinar:

1. Bodhala client’s success with benchmarking

Our benchmarking methodology is based upon clustering – using like comparisons that can be measured against one another. With benchmarking, we arm clients with the information needed to start a data-driven conversation with their law firm. This drives clients towards the value they see fit and allows them to negotiate better rates by benchmarking their law firm against those of similar caliber. Recently, a Bodhala client leveraged our benchmarking capabilities to drive down the cost of a premier partner that they had been utilizing for years.

2. Bodhala enhances LEDES files

The Legal Electronic Data Exchange Standard (LEDES) file was developed over two decades ago with the purpose of providing a standard data format for electronic invoices. While LEDES files serve their purpose of getting invoices paid, they provide no insights on spend or how to manage relationships with outside counsel. At Bodhala, we have created a data transformation team that ingests invoice data in the platform and transforms the data in a meaningful way that allows clients to make true apples-to-apples comparisons and provide actionable insights to their departments. 

3. Bodhala’s approach to UTBMS coding

Uniform Task-Based Management System (UTBMS) codes were created to standardize the categorization of legal work and expenses; however, they can be problematic. After evaluating UTBMS codes within insurance and finance clients, we have noticed that these codes have a multitude of gaps and overlaps. This led our team to create our own litigation AI model to apply the proper UTBMS codes to clients’ data. At best, UTBMS codes submitted by law firms are 60% accurate – our model performs with 99% accuracy.

4. Bodhala’s diversity functionalities

The law has historically been the least diverse, white-collar profession in the country. Five years ago, Bodhala launched a product allowing our clients to track which lawyers are handling their matters and their origination credit. Our clients are looking to drive actionable change in their law firm relationships.

To learn more about implementing these changes, you can check out our webinar recording here or download our most recent whitepapers, Legal Operations: Time to Shine and General Counsels: Taking the Lead.

This week, Bodhala participated in Consero’s virtual conference – Legal Operations & COVID-19: How Law Departments are Adjusting for the Future.

Bodhala CEO, Raj Goyle led legal operations leaders from Fortune 500 companies through dynamic conversations on how to leverage data to make more informed decisions on spend management and pressing diversity initiatives during these challenging times.

Here are some of the key themes from the sessions:

Data is the key to driving real change.

• From cost optimization to compliance to diversity and inclusion, legal operations professionals are looking to leverage data to drive actionable change within their legal departments. One attendee, a legal operations business analyst, noted that her company is relying heavily on data to understand the diversity of the law firms they utilize and the timekeepers staffing their matters. Numerous attendees shared that although data is the key to driving change, it is difficult to rely on data from e-billers as it is both messy and inaccurate. Check out our infographic, 7 Reasons Why You Need More Than an E-biller to Create a Winning Legal Department, to learn more.

The pressure to cut costs is on.

• Attendees noted the increased pressure to cut costs, as their CFOs have started to examine legal bills with heightened scrutiny since the start of COVID. Outside counsel rate cards were identified as the “low hanging fruit” that can offer immediate savings. Most companies approved their 2020 rate cards ahead of the global pandemic outbreak in March, meaning that the majority of companies are being charged inflated rates that do not reflect the current economic climate. One attendee, a legal operations specialist, noted that she, in tandem with the company’s general counsel, would be evaluating the legal department’s spend line by line to identify cost efficiencies in response to pressure from the CFO. To learn more about how legal operations professionals are championing their roles in response to COVID, check out our most recent whitepaper.

There is a magnifying glass on diversity.

• Given the current climate, diversity initiatives have accelerated as companies are carefully evaluating their efforts to promote a diverse and inclusive environment, both internally and externally. Legal departments are implementing various measures to hold themselves and their law firms accountable. But, the bottom line is that data needs to drive these changes. One attendee, a legal operations business analyst, shared that her team is relying on data to examine the diversity of timekeepers staffed to her company’s matters after noticing an extreme lack of gender and racial diversity within her panel firms. Read our blog post to understand how Bodhala is helping teams make data-driven decisions on diversity and inclusion.

Ways to Act on Diversity Now

Understanding the diversity of timekeepers staffing your matters and tracking origination credit is the quiet revolution that will lead to diversity in the legal profession. 

If there was ever a moment for legal operations professionals to take the bull by the horns, the time is now.

Ask your GC if this information is currently being tracked, and if it’s not, ask why.

Are you armed with the data you need to drive change within your organization?

Bodhala’s Insights

Bodhala is passionate about empowering legal operations professionals with actionable insights that can drive meaningful change within their organizations.

From top timekeepers to average hourly rates, and everything in between, all you need to know about your outside counsel spend and law firm staffing is housed in your data. 

Bodhala arms you with the data you need to hire the right lawyer at the right law firm at the right price.

Hercules, “the god of analytics” is Bodhala’s trailblazing proprietary database that operates as a single source of truth for legal data, and provides our clients with a 360° view of the legal market.

Running on Hercules, the Bodhala platform has an intuitive dashboard that analyzes:

• Rates
• Observed discount percentages at relationship and practice area/work type level (anonymized)
• Matter types
• Factors that create peer sets, providing accurate apples-to-apples comparisons of cost and staffing
• Timekeeper diversity

With our platform, Bodhala clients have utilized data and metrics to review invoices with heightened scrutiny, implemented scorecards to create true side-by-side comparisons of law firm rates and performance, evaluated firms’ diversity based on data-backed insights, and more. 

Bodhala’s Resources

We’re here to help you find efficiencies in your company’s legal spend – connect with us to learn more about how we can help.

Salvaging a business during bankruptcy comes with a hefty law firm price tag.

Surviving bankruptcy is a delicate balancing act. 

As businesses scramble to preserve assets and employees, they must retain law firms that can guide them through the unknown. 

In some of the largest bankruptcy filings within recent years, law firms have received massive payouts while significant workforce reductions occurred. 

More often than not, employees are laid off without severance even though company executives, boards, and bankruptcy judges allow law firms to charge hugely excessive fees throughout the bankruptcy process.

Company executives and board members have suffered severe reputational damage by not effectively managing the needs of their distressed businesses and employees.  

Although layoffs are often inevitable and lawyers play a critical role in bankruptcy filings, Bodhala data shows that law firms have charged exorbitant rates that exceed those of other mission-critical legal services.  

History will repeat itself during COVID as a potential record number of bankruptcies loom.

Enter Bodhala.

There is power in your data to control spiraling legal fees. 

Bodhala’s Hercules database – consisting of 32,000+ law firm profiles, 5 million matters, and over 500,000 timekeepers – helps you ensure you hire the right lawyer at the right law firm at the right price. 

Historically, rates for bankruptcy and restructuring work are undiscounted street rates. As the Trustee Program states, the rates must be comparable to similar work, but our data shows that rates for similar work are significantly lower than those currently being approved by the Trustee Program.

The market is significantly overcompensating law firms for bankruptcy and restructuring work. 

Throughout some of the largest bankruptcy cases over the past several years, employees suffered immensely while law firms padded their wallets. Let’s review how this played out at Lehman Brothers and Toys “R” Us.

Lehman Brothers

The investment bank’s collapse came in September of 2008, catalyzing the financial crisis that rocked the U.S. economy to its core.

More than 30 law firms were retained throughout the bankruptcy and liquidation process, making Lehman Brothers the most expensive bankruptcy in history. Firms accrued over $2 billion in legal fees.

Lead counsel for the investment bank, Weil, Gotshal & Manges, racked up over $484 million with lawyers billing up to $1,000 per hour.

So what happened to the employees?

The company’s entire 25,000-person workforce was laid off.

Employees were angry, distraught, and left to pack up their desks while bankruptcy lawyers began their feeding frenzies. 

Lehman’s CEO, Richard Fuld, suffered severe reputational damage as a result of the bankruptcy. Some referred to him as one of the worst CEOs of all time due to his negligence in protecting the company from the inevitable doom when he had the chance.

Toys “R” Us

The beloved toy store chain succumbed to bankruptcy in 2017.

As a result, the company received a hefty legal bill as their lead counsel, Kirkland & Ellis, took home $56 million.

Judge Keith Phillips reviewed and approved the firm’s fee application which listed the top two earners as raking in over $3 million dollars, billing hourly rates between $995 and $1,480. 

105 partners and 131 associates at Kirkland & Ellis worked on the bankruptcy case with seven partners and associates billing over one million dollars EACH in fees. 

What did the Toys “R” Us employees take home?

The employees who missed out on Thanksgiving dinners to accommodate Black Friday shoppers, those who sacrificed family gatherings to cover shifts, and spent their birthdays working instead of celebrating…they must have received something, right?

Think again.

The entire 33,000-person workforce was laid off without severance pay. 

Though the company initially promised employees severance, they quickly rescinded the offer as the retailer continued its downward spiral.

The Toys “R” Us bankruptcy was an outrage and led to the public shaming of the executives, board members, and bankruptcy judges that oversaw the filing.

The list of cases in which employees suffered while top law firm partners walked away with huge sums of money goes on. It will only continue to grow throughout the COVID crisis if we do not hold law firms accountable.

It is now more urgent than ever to find efficiencies in your company’s legal spend.

Bodhala is your partner for making this happen.

Our platform helps you ensure that you are balancing precious dollars between employee stakeholders and law partners.

Real transparency, real accountability, real control – that’s what we’re all about.

While events and in-person meetings are on pause in the age of COVID, Bodhala has fully embraced the opportunity to learn and connect with others virtually.

Earlier today, Bodhala participated in Consero’s Virtual Knowledge Bridge – Leading An In-House Law Department Through Uncertain Times: Challenges & Opportunities For The Legal Operations Practitioner.

Throughout each session, leaders from top Fortune 500 companies shared how their legal departments have pivoted throughout COVID.

Here are our main takeaways:

• It’s legal operations’ time to shine. As companies continue to work remotely, legal operations teams have been critical in ensuring the smooth, seamless transition of hundreds to thousands of employees. One attendee, a Head of Legal Operations, shared that her legal operations team turned into a daily command center, proving them to be an essential arm of the department. Legal operations teams have been brought on for additional support in various areas of their departments. Another attendee, an SVP & COO, Legal & Associate General Counsel, noted that his team shifted their focus to supply chain and public policy matters in a project management and data coordination capacity. To learn more about how legal operations professionals are championing their roles in response to COVID, check out our most recent whitepaper.
• Increased cost pressures across departments. Though many attendees expressed that cost pressures existed before COVID, the pandemic has accelerated the need to operate economically. A Director of Legal Operations & Governance, shared that her company’s finance team is looking at all costs with heightened scrutiny, citing outside counsel spend as an area of focus. Another attendee expressed that there is heavier cost pressure within his legal department as he cited a 60% focus on internal costs and 40% focus on external costs – like outside counsel spend.
• Varying levels of maturity within legal departments. As heard throughout this morning’s sessions, legal departments are operating at varying levels of maturity. Some teams have been quick to implement thoughtful cost reduction changes with their outside counsel while others are still getting their bearings amidst the crisis. A Manager of Legal Operations noted that her team is paying close attention to how their law firms share in the burden of this crisis as this will affect her team’s future panel arrangements. A number of attendees also noted that their legal department’s refused rate card increases in 2020, offering significant savings. Another attendee shared that his team locked in 2019 rates for two years, allowing 50% savings.

Bodhala’s Insights

Bodhala CEO and Co-Founder, Raj Goyle led attendees through examples of cost pressure challenges our clients’ legal departments have faced during the pandemic and how they leveraged Bodhala’s platform to take back the reins from their law firms.

As company executives evaluate spend categories with a keen eye, the need to optimize legal spend has become even more urgent. 

The key to implementing meaningful change is through data. 

Everything you need to know about outside legal spend is housed in data – from top timekeepers to average hourly rates, and everything in between.

If you’re considering relying on your e-biller – think again. 

Data pulled from e-billers is typically chaotic, and more often than not, inaccurate. Check out our infographic, 7 Reasons Why You Need More Than an E-biller to Create a Winning Legal Department, to learn more.

Now, more than ever before, companies are relying on their legal operations team to deliver actionable, data-backed initiatives that can guide the business through COVID and set the stage for a successful future.

Bodhala is here to help.

Hercules, “the god of all analytics platforms” is Bodhala’s trailblazing proprietary database that operates as a single source of truth for legal data, and provides our clients with a 360 view of the legal market.

Running on Hercules, the Bodhala platform has an intuitive dashboard that analyzes:

• Rates
• Observed discount percentages at relationship and practice area/work type level (anonymized)
• Matter types
• Factors that create peer sets, providing accurate apples-to-apples comparisons of cost and staffing

Our clients’ legal operations teams have championed their roles in response to varying cost pressures fueled by COVID.

With our platform, these legal teams have utilized data and metrics to review invoices with heightened scrutiny, implemented scorecards to create true side-by-side comparisons of law firm rates, shifted rate card negotiations to finance and procurement in order to focus on mission-critical work, and more. 

Bodhala’s COVID Resources

Even during times of economic turmoil, the legal industry continues to respond with inflated fees and a refusal to hold timekeepers accountable. This has a tragic consequence for your business.

Find efficiencies in your company’s legal spend — we’re here to help. Contact us to learn how Bodhala can assist with your spend optimization efforts.

Since the start of the Covid pandemic, Bodhala has fielded client requests for data-backed insights on how to handle their law firm payables. 

Despite the current economic situation, law firms continue to invoice clients at rates that are even higher than the previous year. 

Knowledge is power. Bodhala equips your corporate legal department with the information needed to navigate these trying times. 

Consider these suggestions from our team of legal experts when evaluating your department’s spend:

Are corporate legal departments paying outstanding invoices?

While every budget line item is being reevaluated, corporations have halted accounts payable in an effort to preserve working capital. We have seen numerous businesses skip out on their rent payments, renegotiate vendor contracts, and cut executive salaries significantly.

As “The Great Retrade” takes shape across industries and corporate legal departments evaluate invoices with heightened scrutiny, law firms can no longer shield themselves from the negative effects of a crisis. Law firm invoices from the first half of the year are likely to be recut at the end of the pandemic. 
Based on market data from recent years, Bodhala predicts that nearly $100 billion of invoices are currently outstanding. We project that only 50 to 65% of outstanding receivables from the first quarter of 2020 will actually be collected.

Can I renegotiate rates?

You should absolutely work with your law firm to establish new rates that reflect the current economic situation. Bodhala recommends restructuring all hourly billing models with significant adjustments to your current rate card – even if you currently receive a discount.

Rate cards have increased year-over-year, usually without explicit sign-off from the client. Consider implementing your last approved rate card as this can help your business realize savings of 15 to 20%.

How should I handle ongoing matters?

Pay close attention to the staffing on your matters, monitor associate and partner matriculation, and do not be afraid to ask for discounts – after all, it is your money. Any M&A transactions halted by COVID should receive significant dead deal discounts of 15 to 25% on accrued fees.

Is my law firm going to be around when this is all over?

With so much uncertainty still on the horizon, it is not guaranteed that your law firm will be left standing when this is all said and done. Should your law firm go under, make sure you can pivot accordingly to a backup firm that can handle any mission-critical legal services. Stay informed on your law firm’s performance during these unprecedented times by requesting an economic health statement. Do not let your company be the last to pay a flopping firm.

Bodhala is here to help.

Bodhala is your partner for optimizing your outside legal spend and holding your law firm accountable throughout these challenging times. Our platform and team of legal experts can provide you with actionable insights to manage your law firm relationships, handing the reins back over to your corporate legal department.

We understand the critical need to conserve cash and run your legal operations efficiently throughout this crisis. To learn how Bodhala can help with your spend optimization efforts, contact us at [email protected]

In each recent crisis – the dot-com collapse, the 9/11 attacks, the Financial Crisis – we have seen industries take major hits, adapting to the fiscal reality each has presented, and sharing in the pain. However, there is one group that has historically been exempt from the shared cost of these crises – the legal industry.

During each of these monumental crises, law firms established themselves as essential to the fate of your business as you navigated the uncertainty. In doing so, the industry maintained its pricing and performance almost seamlessly – even during times of economic peril. 

Take a look back at the 2009 financial crisis. While the lack of cash flow ran rampant in other industries, law firms experienced stability and even increases in their profits per partner (PPP). The top three firms grossed PPP of $4.3 million, $3.13 million, and $2.965 million respectively according to the AmLaw 100 rankings. 

In case you forgot, this was during an economic crisis. Sounds unfair, right?

Though they have gotten away with it in the past, the discrepancy in legal market income and market forces is no longer acceptable. As companies struggle to navigate their new reality, law firms are seeing an influx in their workload. 

In a survey recently conducted by the Association of Corporate Counsel, over 10% of in-house lawyers, general counsels, and chief legal officers shared that they are outsourcing more work than usual to law firms as they look for additional support during the crisis.

If that is the case, wouldn’t you like to make sure you are hiring the right firm at the right price?

Good news – Bodhala is here to help you do just that. 

It is now more urgent than ever to find efficiencies in your spend categories and to hold your law firm accountable for their fees.

Bodhala was built on the foundation that the legal market is not special – it is just like any other sophisticated market service and should act accordingly through economic undulations. 

Our platform refines organizational processes by empowering your legal team with deeper insights that allow you to better analyze, interpret, and optimize outside counsel spend. 

As the coronavirus pandemic has unraveled the past several weeks, we have witnessed the rapid downturn of our economy. It has left companies to retrade every billing line item – from real estate, to employees, to insurance. Companies are holding their bills, deferring payments, and renegotiating leases.

Among some of the largest industries to take a hit are airlines and real estate. 

Air travel has almost completely dissolved with US carriers cutting about 70% of flights this month. As a result, major US airlines including Delta, JetBlue, Southwest, United, and American applied for government aid in hopes of receiving a grant authorized through the stimulus package. 

Even with government assistance, Delta Airlines projects those funds only lasting until June as they burn through $60 million a day. The airline expects Q2 revenue to be down by 90 percent from 2019 and continues to add to the 35,000 employee volunteers taking unpaid leave.

Travelers aren’t the only ones staying away from the airline industry. 

Aircraft leasing investors, who once enjoyed hefty returns, are now dispersing left and right as dividend payments are suspended and payment schedules are renegotiated. 80% of Avalon Holdings Ltd. customers, one of the world’s largest plane lessors, sought payment relief within the past week.

Mass workforce layoffs have Americans strapped for cash and unable to make payments on time, or at all. As the first of the month approaches, many Americans are unprepared to make their rent payment with housing advocates in New York pushing for a statewide rent strike on May 1. 

It’s not just your average American that is worrying about making rent. Co-working giant, WeWork, halted rent payments at several US locations as “the great re-trade” begins to take shape in the real estate market. The company is looking for an asset-specific solution that benefits them and their over 600 global landlords.

Luxury fitness company, Equinox, recently issued a letter to their landlords to let them know that they should not expect the chain’s rent check at all. Equinox is temporarily not paying their vendors and they recently furloughed a number of employees.

Here is some food for thought:

If Delta Airlines can barely pay their employees, if WeWork has to renegotiate their leases, and if Equinox isn’t paying their rent or vendors – isn’t it time for you to rethink paying that hefty legal bill?

Bodhala is reimagining the legal services marketplace by providing legal market intelligence, insights, and guidance to corporations to optimize their legal operations. Our current economic climate makes the need to take control of your spend more critical than ever before. 

Our platform provides you with actionable insights to manage your law firm relationships and equips you with the logic needed to execute legal operations efficiently and effectively. Real transparency, real accountability, and real control.

As part of an ongoing series, we will be covering topics ranging from tactical “dos and don’ts” to navigating law firm payables and everything in between.

Like what you are seeing?

Download our free white paper to get data-backed and time-tested guidelines for understanding your RFP responses. You’ll also see a real-life example where our data saved a global bank millions on their rate negotiations.

Download The Full Guide

Shoot us an email at [email protected], and let’s talk about how to get started.

While companies face a financial collapse, bankruptcy & restructuring partners prepare for big paydays.

Article Highlights

• The coronavirus pandemic has a number of large retailers facing bankruptcy and restructuring.
• Law firms will reap the benefits of other companies’ financial collapse once more if they are not held accountable.
• Bodhala can serve as a resource for companies to ensure they hire the right lawyer at the right law firm at the right price.

Floor after floor of designer brands. Elaborate holiday displays emitting a sense of joy and a tinge of magic. Rushes of crowds fulfilling their Black Friday shopping lists. These happy memories that department stores once created have now been replaced by nail biting calls with creditors and endless meetings with Big Law firms as they prepare bankruptcy filings for numerous retail companies and their boards. 

The coronavirus pandemic has vaporized any aspect of normalcy we once knew and continues to decimate our economy, taking out businesses big and small. 

With shelter-in-place orders in effect for nearly two months now, non-essential businesses are feeling the hurt as some of the biggest names in retail fall victim to bankruptcy.

The current economic distress is leaving the likes of Neiman Marcus, Macy’s, and Nordstrom facing bankruptcy while JC Penney is now in advanced loan talks with existing lenders. 

Penney’s loan package could total between $800 million to one billion with bankruptcy filings potentially taking place within the next few weeks.

The rapid financial downturn has left department store chains with only a few choices:

1. Restructure debt directly with creditors;
2. Restructure with court assistance;
3. Liquidate entirely.

Sadly, any of these options come with law firm sticker shock. 

Sales and discounts? Those might exist in retail, but law firms are a different story. 

Even when companies find themselves in dire need of competitive pricing, the legal industry continues to respond with inflated fees and a refusal to hold timekeepers accountable. This has a tragic consequence to real people — like employees and suppliers.  

Now is not the time to dig deeper into your company’s pockets to pay the inflated fees law firms are charging. Bodhala’s proprietary data set serves as a valuable resource for companies at risk to ensure they don’t pay out tens of millions of dollars to their law firm while kicking their employees to the curb.

We can all learn a lesson from Toys “R” Us which filed for bankruptcy in 2017.

The beloved toy store chain that was part of so many of our childhoods turned into a feeding frenzy for Big Law as top firm Kirkland & Ellis took home $56 million.

Bodhala data shows that law firm rates for Toys “R” Us were 36.6% higher than similar “bet the company” litigation. These matters are plagued by too many attorneys on each filing, brief, meeting, call, and hearing.

Judge Keith Phillips reviewed and approved the firm’s fee application which listed the top two earners raking in over $3 million dollars while billing hourly rates between $995 and $1,480. 

105 partners and 131 associates at Kirkland & Ellis worked on the bankruptcy case with seven partners and associates billing over one million dollars EACH in fees. 

What did the Toys “R” Us employees take home you may ask?

The employees who missed out on Thanksgiving dinners to accommodate Black Friday shoppers, those who sacrificed family gatherings to cover a shift, the people who spent their birthdays working instead of celebrating…they must have received something – right?

Think again.

Employees received no severance pay. Nothing.

Did this have to happen? Absolutely not.

The Toys “R” Us bankruptcy was an outrage and led to the public shaming of the management and system that allowed the filing to pan out the way it did.

Yet companies are on track to see this happen again tenfold during the coronavirus pandemic.

The United States Trustee program is a component of the Department of Justice tasked with overseeing the administration of bankruptcy cases. Significant reputation risk is at stake if judges and US Trustees do not ensure rates are reasonable and aligned with other market rates.

So what’s the solution here?

Enter Bodhala.

It is time to hold your service providers accountable, including pricey law firms. 

Our market data provides transparency into the billable hour and actionable insights so that the US Trustee can operate effectively — instead of overseeing another massive law firm payday while an entire workforce gets kicked to the curb.

With over $15 billion in legal invoices and data from over 235,000 lawyers spread across 31,000 law firms — with the most sophisticated algorithms ever created in legal spend management —  we’re here to ensure that you hire the right lawyer at the right law firm at the right price.

Contact us at [email protected] to learn how Bodhala can help with your spend optimization efforts.