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IN BRIEF: Legal depts delaying bills and seeking discounts amid pandemic

Caroline Spiezio  

Caroline Spiezio  

(Reuters) - Legal departments are cutting costs in an attempt to mitigate the economic fallout of the coronavirus pandemic, such as renegotiating agreements with law firms or asking for discounts, according to data from procurement trade organization Buying Legal Council.

In a survey conducted by the council on legal departments’ responses to the crisis, more than half of respondents said they had postponed non-urgent work and 53% sought extended payment terms to give them more time on bills, Silvia Hodges Silverstein, the group’s chief executive officer, said in an email on Tuesday.
And almost half said their legal department was re-negotiating agreements with law firms and suppliers, while 47% reported asking for discounts.
The survey ran from March 30 to April 5 and it had 83 respondents, mostly legal procurement or legal operations professionals at corporate legal departments, Silverstein said. It did not collect information such as respondents’ company size or location.
Many companies across the country have in recent weeks announced cost-cutting measures, including mass layoffs, as state governments order residents to stay at home and businesses to shutter.
The bulk of the survey’s respondents – nearly 70% – reported their legal department had cut all non-essential costs.
Twenty-one percent said they’re sending more work to non-law firm legal service providers, which often offer lower rates than law firms, while 26% said their companies are bringing more work in-house.
”When the CFO comes into your office and says, ‘Your budget is cut’ … it’s easier to just cut the law firm rather than your headcount,” Silverstein said in an interview on Tuesday. “No one wants to really fire people.”
Still, almost one-third of respondents also said their legal department has reduced headcount.

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