Why Recovery Rates Really Matter
By Michael Feit | Best Practices , Sole Provider , Vendors
For the majority of firms that still pass through costs, the true cost is not what you are paying to Lexis or Westlaw. Instead, the true cost is what the firm was unable to pass through to clients.
If a firm is forecasting future recovery rates >80% for either Westlaw or Lexis the business case will show that elimination is not worthwhile. The closer a firm is to passing through and recovering 80% of the costs, the opportunity for savings derived from the elimination of a vendor is essentially eradicated. When recovery rates are high or the negotiated rates with Lexis and Westlaw are low, the costs to replace content and build workarounds, coupled with the hassles involved, would likely negate much of the benefit of going sole provider.
Beyond knowing what is the firm’s true costs and recovery rates today, does the firm have a projection for the future?