What the Hell is a ‘Pre-negotiated discount’?

Reading the latest 2023 Citibank-Hildebrant Consulting LLC ‘Client Advisory Report‘ I came across a term I had never heard of in over 25 years of working in the law. And that term was:

Pre-negotiated discounts

But I must be alone. Because, the Report goes on to say – about the use of AFAs – that:

The more prevalent trend is the presence of pre- negotiated discounts. We often hear from firms that their clients start by requesting an AFA and ultimately ask for a pre-negotiated discount.

Firms project 44% of revenue to come from pre- negotiated discounted work in 2022, consistent with 2016 and 2021. Even so, 39% of large firms expect more than half of their revenue to come from pre-negotiated discounted work in 2022.

Half of the large firms surveyed expect the proportion of pre-negotiated discounted work to remain stable in the future, while 39% expect it to increase.
Looking at a common sample of large firms, roughly 64% of 2022 revenue is likely to come from either an AFA or a pre-negotiated discount.

With close to two thirds of revenue coming from either, we expect that firms will continue to focus on the efficient delivery of legal services and improving their realization.

So, while I have no idea what a ‘pre-negotiated discount’ is, I now know that “39% of large firms expect more than half of their revenue to come from pre-negotiated discounted work in 2022.“

Okay, to put some perspective on this we are talking 100s of millions of dollars in revenue a year, if not billions!

So what the Hell are ‘pre-negotiated discounts’? – and the only thing I have for you are contractually agreed volume discounts, which (assuming I am right) the Report happily acknowledges are not AFAs.

Anyhow, if you have any idea what a ‘pre-negotiated discount’ is – and more importantly how I might go about pre-negotiating these with some of my service providers – let me know.

And if you want to read some of the other comments I have on the 2023 Citibank-Hildebrant Consulting LLC ‘Client Advisory Report‘, check out my post here.

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Photo credit Tamanna Rumee on Unsplash