Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Circuit City Stores Inc. pays its legal invoices promptly if its law firms reduce their fees. Few people rush to pay their bills, and in-house lawyers aren’t any different. On average, corporate law departments take about two to three months to process invoices from their outside counsel. So when Circuit City announced last fall that it would pay all legal invoices within 20 days, its law firms took notice. But speed has a price. In return for early payment, Circuit City has come up with an innovative trade-off: The Richmond, Va.-based electronics retailer insists on a 3% discount on all legal fees. The reduction is on top of the already reduced billing rates Circuit City has with its regular roster of 50-plus outside firms. The company declined to say how much money it has saved so far. General Counsel Reginald Hedgebeth said his 16-lawyer department came up with the idea during a budget review session last fall. “We negotiate contracts all the time for our internal clients, and they include terms of payment with early payment discounts,” Hedgebeth said. “We thought, ‘Why not do the same for legal fees?’ “ Besides, Hedgebeth said that the company was already paying its bills within 20 to 30 days � here was a way to get something in exchange. “We ran it by a few firms, and, for the most part, the reaction was very positive,” Hedgebeth said. “Law firms are a cash-flow business, and they want cash as quickly as possible. There’s a benefit to the recipient to get paid early, even if it is discounted.” One of Circuit City’s longtime outside counsel is Richmond-based McGuireWoods. According to partner Howard Feller, the firm agreed to the discount plan because “we viewed this as fair and reasonable in view of our relationship and Circuit City’s very quick payment practices.” In fact, Hedgebeth said that every firm save one was willing to knock the 3% off its bill. The holdout, which he declined to name, told him, ” ‘We’d rather you pay us late.’ “ The discount doesn’t apply to law firm expenses; it covers only the legal fee portion of the bill, Hedgebeth added.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.