Reducing any and all Contractual Costs – Our clients share that they are moving past the immediate crisis of employee safety and are becoming increasingly concerned about cost structures based on the financial markets. A number of client law firms and legal departments have hired outside experts to immediately review their contractual obligations to achieve potential short and long term cost relief. While some of these initiatives have been completed in-house or in the past, LegalShift notes that client cost improvements have been inconsistent and underwhelming, as clients are not experts in any of these fields, and therefore do not understand the cost structures. LegalShift’s own work in contractual cost reduction efforts have resulted in cost savings of between 10-45% – and this has been largely based off of previous contracts executed by internal client staff. Outside of real estate leases, the major areas where clients are focusing include:
- Print/copy/scanning and multi-function device contracts
- Legal research agreements
- All technology contracts
- Telecommunications contracts (your “wired” computer infrastructure as well as your “wireless” devices where you are paying for cell phone service)
- Middle office and back office managed services/facilities management contracts (e.g., print room, copy center, hospitality, information governance and records, reception, etc.)
Updated 4/1/2020 – Technology and Telecommunications Cost Reduction
Last week, LegalShift sent you an email (and also posted on social media) targeting How Clients are Addressing “Project Distancing” and Responding to Economic Uncertainty. Included on this web page is a growing list of items that we find our law firm and law department clients pursuing, during this time of health and economic crisis. Further information on cost savings opportunities can also be found on our website under “Shift Happens”.
Under the “Reducing any and all Contractual Costs” heading, we focus today on short and mid-term reduction of technology and telecommunications costs. As we perform this type of cost savings work for our clients, in our experience, the quickest two savings opportunities appear to be with telecommunications, both wireless (mobile devices) and wired (network infrastructure and phone lines), where savings can be recognized as early as 60 days, as well as with technology related contracts that are expiring within 90 days.
We recommend that you evaluate and take the following steps to pursue your own technology and telecommunications cost savings:
- Determine which of the firm’s technology contracts (e.g., software, hardware, SaaS, managed services, support and maintenance) and telecom contracts (e.g., voice, internet, data, wireless, and audio and web conferencing) are set to auto-renew or expire within the next 90 days. All of these contracts are ripe for renegotiation. Note of caution: some of the firm’s technology and telecom contracts may have multiple expiration dates in that different services (e.g., software modules) auto-renew or expire at different times. In this situation, the firm should request that all services be put on the same contract term so that all services run co-terminously.
- Determine if any of the firm’s technology or teIecom services are not under contract. If so, these services are the lowest hanging fruit for cost reduction and, therefore, should be attacked first. Typically, the firm will get much better rates from its carriers and vendors if it agrees to enter into a contract for a certain term.
- Identify your larger telecom contracts, regardless of expiration date, as these rates may be subject to negotiation during the existing contract term. As a condition to giving better terms, the carrier may require that the firm extends its contract which may be a worthwhile trade-off for the firm.
In a following communication, we will discuss how to effectively negotiate with your vendors and carriers to obtain the best rates and contract terms from them. In the meantime, please stay healthy!