Microsoft, the software giant, has told law firms across the globe that they must trim fees and scrap hourly-rate billing if they want to continue working for the company.

Brad Smith, senior vice president and general counsel, outlined the launch of a plan designed to slash Microsoft’s legal spend over the next 12 months.

Addressed to every one of its legal services providers, Smith revealed that Microsoft had ‘initiated a re-engineering program focused on increasing and rewarding cost efficacy’. He said: ‘Attorneys’ fees are fundamental to this effort.’

According to Smith, the programme requires firms to propose ‘creative alternative billing solutions’, with a nudge towards ‘value-based in place of hourly-rate billing’. A 4% cap on rate increases will also now apply.

Microsoft pays more than $150m (£75m) a year to the 17 firms on its premier preferred provider panel.

With some of the big firms showing record profits in recent results, Microsoft is clearly flexing its muscle to kick firms where it hurts!

How do you feel about larger clients squeezing your fees? Do you think Microsoft’s proposals make sense?

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