Nobody likes to be held hostage – actually, it’s something that people dread. And yet lots of law firm administrative executives have put up with “Hostage Fees”, the permanent withdrawal fees that are embedded in their offsite records storage contracts. Many law firms agreed to these terms decades ago when they first started to use these vendors. The fees have continued to grow unchecked and now amount to, in some cases, seven-digit termination charges.
The original reason for these fees (usually $3.00 to 6.00 per box) was to protect the offsite storage vendors in case a large client withdrew their boxes and they suddenly had excess capacity that they built specifically for that client. That is no longer the case. Nowadays the purpose of these “hostage” fees is twofold:
1. To prevent the firm from competitively shopping their storage contracts and possibly moving their storage volume, and
2. So that it does not make economic sense (in most cases) to destroy files that are stored offsite. That means you’ll pay for storage of the files indefinitely, even if you don’t need them any more and they could be destroyed.
So, ask yourself, are these fees a concern for your firm? Does your firm recognize these fees as the liability that they are? Do you think these fees allow the offsite storage company to charge other fees (for example, the famous re-boxing charge) and compromise their commitment to service? Darn right they do.
One of the best ways you can reduce or eliminate these fees is to initiate a competitive bid process, which will put your incumbent vendor in the position of vying to keep your business. Remember that you are in a buyer’s market now for offsite records storage, so you should be in the catbird seat calling the shots, not in the hostage seat!