Author: Onit

Creditors and former workers struggle while Big Law firms see the softer side of the Sears bankruptcy.

Over at The Wall Street Journal last week, journalist Soma Biswas illuminated the “tug of war” between former professionals, vendors, and the teams of Big Law firms vying for a piece of the shrinking pie of Sears assets in bankruptcy.

Some of the biggest firms with the biggest price tags have charged more than $200 million in legal bills since Sears went under in late 2018. Sears’ main bankruptcy firm, Weil, Gotshal & Manges LLP, maxes out their billing at $1,695 an hour according to the article, and their total payout has been more than $65 million.

In October, a $50 million estate fund was set up to pay creditors. Akin Gump, who represents unsecured creditors, has so far billed for more than half the funds of that pot, while vendors and creditors were paid $21 million in December.

Meanwhile, more than $3 million in severance to former Sears employees remains unpaid.

While these numbers might sound shocking, it’s a trend we’ve seen growing in the legal industry over the last decade. Last summer, WSJ wrote a groundbreaking piece, based largely on data we provided, that examined the changing nature of law firm partnerships and their interactions with clients. In the span of a few decades, white-shoe law firms have transitioned from a relationship-based model to a system where “data and money rule.”

Bodhala can’t keep you out of the headlines but we can keep the headlines from covering your legal spend. 

We unlock the power of the data you already own to help your corporate legal department make decisions to keep your company’s legal billing under control – and out of the news! Our machine learning algorithms immediately identify patterns in your legal spend to give you the best three-dimensional view of your billing, giving you the confidence to negotiate from a position of strength in every interaction and enhance your relationship with your trusted outside counsel.

Our platform gives you instant snapshots of every facet in your legal matter, from the number of timekeepers to surfacing the true rate per hour, and staffing diversity.

Bodhala is the leading tech platform enabling corporate legal teams to analyze and optimize their spend. We’re dedicated to helping firms get a handle on their legal spend, regardless of the size and scope of their enterprise, or the matters at hand. 

Using the power of big data and machine learning algorithms, our proprietary system helps corporate legal departments find the right talent, at the right value. We’ve saved our clients millions in negotiation and procurement every year, and we’re eager to get to work for you.

Contact us TODAY to find out how we can help you realize more value in your spend: http://bit.ly/37zaM7X

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Bodhala hosted its first live webinar on Dec. 10, 2019

Presented by Bodhala team members across Client Success, Marketing, and Product, legal leaders from around the world joined the live webinar. The webinar covered two hot-button topics: using big data analytics to uncover best practices and pitfalls to avoid when negotiating annual rate card increases with outside counsel. We highlight many of those pitfalls in our two new white papers, The Hidden Staircase and The End Of Excel Hell.

The webinar recording and presentation slides are now available here.

“Big data analytics are revolutionizing how corporate legal departments negotiate with their panel law firms, and we’re glad to share how in this webinar,” said Bodhala SVP & Head of Client Success, John Maloney. “One of the most irritating pain points for our clients is the yearly dread that comes with annual rate negotiations. Bodhala’s free and new rate card RFP platform alleviates that pain by leveraging machine learning to surface the best possible outcome for your legal department.”

Maloney explained that the webinar stemmed from seeing countless clients struggle to negotiate annual rates with panel firms, a process fraught with confusing concepts. Recognizing this universal challenge, Bodhala developed a learning series on RFP rate card negotiation, starting with what we call the “Hidden Staircase” of law firm rates.

Still, several barriers exist to getting the best possible rate, and most of them cannot be easily overcome by legal department staff. Bodhala created a whitepaper to help professionals apply our best practices for rate negotiation and navigate out of “Excel Hell.”

Bodhala’s powerful big data analytics are designed to make these processes easier. Our platform streamlines all of your RFPs in one dashboard, giving your legal department an unparalleled, 360-degree view of past spending and unmatched projection ability for the future. 

“Today’s webinar was a huge success and very exciting for us as a business,” said Kyle Johnson, Head of Marketing. “Our unique ability to pull proprietary information out of the Bodhala platform and share it with our audience proved to resonate – as was shown through the lively conversation throughout the presentation.” 

Among the interesting questions and discussion points, here are three of the top takeaways from this discussion:

1. On average, organizations allocate 75% of their outside counsel spend to seven firms. When focusing on your rate card RFP process this year, focus the bulk of the work on prioritizing your top seven firms.
2. According to the audience polls, the majority of companies represented at the webinar did not use a formal rate card RFP process (only 30% did so). Of those that did use a formal process:
   • Over half spend somewhere between 40 – 60 hours per RFP.
   • The majority have 5 – 10 panel firms.
   • The group was split almost evenly between members of the Legal Ops and GC / AGC teams.
   • The average outside counsel spend falls into the $25m – $50m range.
3. By leveraging Bodhala’s free rate card RFP platform, companies are expected to reduce the time they spend running rate cards by one-tenth (~5 hours) with better results. Those who add on Bodhala’s analytics platform are able to experience even more positive outcomes, keeping their annual spends in check and ensuring compliance by the law firm.

Bodhala is a groundbreaking legal technology platform created by lawyers to transform the half-a-trillion dollar global legal industry. 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, trailblazing a new era of legal market intelligence.

Navigating through confusing concepts like annual rate card RFP negotiations is just the beginning. For more information on how Bodhala can revolutionize your relationship with outside counsel, and how to optimize your legal spend, set up a demo today at https://www.bodhala.com/demo-bodhala.

Like what you’re seeing?

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

At this point, you have lined up your annual rate card notices from your panel law firms. Now it’s time to make sense of what’s there and make it work in your favor.

As we discussed in the first part of this series on RFP rate negotiations, every year, clients face complex rate schedules with budget implications that are often unclear. Starting from the street rates down to relationship discounts and write-offs, we call this process for arriving at a final yearly rate the “Hidden Staircase” of legal billing.

Even if you completely understand the Hidden Staircase, the entire process can quickly fall apart and cost you serious money if you can’t analyze the rate cards to ensure you’re getting the most bang for your buck.

And let’s face it: human analysis falls short when you’re seeking an apples-to-apples, market-based approach to the responses you receive. Even getting the data itself causes confusion – some numbers live in multiple Excel files, some arrive via PDF, and others are sent in the body of an email to one colleague, but not another. It’s a mess for legal operations to handle, but that’s where Bodhala can help. With our proprietary Rate Card RFP platform, your team can quickly collect and organize all rate cards in one place. We collect the data in minutes, giving you transparency on your past spend and the visibility to compare the rates of your panel firms. It’s the best way to ensure you’re getting market value for services.

To fully understand the rate responses from your firms, you must consider the factors that can affect your company’s spend throughout a given year:

• Practice areas – For any business, the mix of work is an important variable in understanding the impact of rate card increases. An M&A increase may have a disproportionate impact on the budget of a PE firm compared to a litigation increase – and vice versa for an insurance carrier.
• Matter complexity – Which of your corporate matters are seen as routine, like drafting a tech licensing agreement, versus more complex M&A?
• Timekeepers used – Are partners and associates being matched to their appropriate skill level or seniority across firms?

These factors are the biggest drivers of rate fluctuation. They disproportionately cause billing spikes as the year moves forward.

Historically, in-house legal teams have tried to analyze these factors on their own, losing hundreds of hours of staff time, causing headaches galore, and suffering from diminished eyesight due to countless hours staring at Excel sheet after Excel sheet.

At this point, negotiation is nearly impossible if a company is not empowered by a data-backed solution. Forward-thinking general counsels focused on corporate and legal innovation capable of meeting challenges in the market, recognize the need for a shift in the process. They understand the importance of using analytics to make reviewing rate card RFPs more efficient and to enable running accurate simulations against historical spend.

Spreadsheets and PDFs have clear and immediate limitations. When you consider the resources required to have just one staff person assigned to this endeavor plus one salaried employee – it becomes clear that the cost impacts can be alleviated with data analytics.

TAKING STEPS TOWARD TRANSPARENCY

If your team is still stuck in Excel Hell this rate card season, don’t worry, there is still light at the end of the tunnel. We’ve compiled a set of guidelines to help you understand what you need to look out for when you and your staff review law firm rate responses: 

• Practice area consumption
• Timekeeper consumption
• Rate changes
• Normalizing partner & associate definitions
• Partner & associate matriculation
• Discount normalization
• “Special” volume-based discounts

PRACTICE AREA CONSUMPTION

• Understanding the rate changes in the context of consumption of practice areas from previous years
  • Rate cards (within a firm and across comparable firms in the space) need to be applied to the volume of expected services (M&A, litigation, funds, broken deals, etc.) to understand the impact of law firm proposals.
  • In order to determine the volume expected, review the historical spend from previous years. Do you plan on this remaining consistent? Can you model known changes?

WANT TO KEEP LEARNING?

Download our free white paper to understand the rest of our 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.