Legal Services Provider in Illinois Secures Concessions in Microsoft EA True-Up Dispute

Industry: Legal Services | State: Illinois

Challenge
A prominent legal services provider headquartered in Illinois, with offices across the Midwest and over 2,000 employees, encountered an unexpected licensing cost dispute during its Microsoft Enterprise Agreement true-up. Under the terms of its EA, the company was required to report and pay for any increases in software usage on an annual basis (the “true-up”).

The year before renewal, the firm’s IT environment had changed due to a merger with a smaller law firm and the onboarding of new cloud services.

When Microsoft’s true-up assessment arrived, it demanded significant fees for additional Office 365 users and server software deployments that allegedly exceeded the original agreement.

The sticker shock was substantial – the true-up report suggested the firm owed hundreds of thousands of dollars for the period. However, the company’s leadership believed these charges were overstated or could be negotiated because:

• Some new user accounts were for short-term contract attorneys and support staff who were no longer with the firm at year-end (and the licenses had since been reassigned or unused).
• Certain software deployments (e.g., extra instances of SQL Server and Windows Server) were set up for interim projects or the acquired firm’s transition, many of which were retired within months. The firm felt it shouldn’t pay full annual fees for these transient uses.
• Microsoft had counted all Office 365 E5 licenses for the merged firms, but many users only required E3-level functionality. This misalignment inflated the cost.
• The company was a longstanding Microsoft customer planning to renew its EA; abruptly imposing the full charge might be negotiable to maintain goodwill for the upcoming renewal.

Facing a potentially costly true-up bill and a disagreement over what constituted fair licensing charges, the legal provider engaged Redress Compliance to help challenge the findings and negotiate a more favorable outcome.

The goal was to secure concessions from Microsoft by adjusting the license count, obtaining credits/discounts, or resolving the dispute before signing the next EA.

The situation was time-sensitive and required diplomacy. The firm needed to remain compliant without overpaying and preserve a positive vendor relationship.

The Process

1. Data Validation and License Review: Redress Compliance’s first step was to perform an internal license audit to verify Microsoft’s true-up claims. The team gathered detailed records of user accounts, devices, and software deployments over the year. By cross-referencing HR records and IT logs, they identified discrepancies – for instance, about 150 Office 365 accounts that Microsoft counted as “additional” were accounts of departed employees or duplicate accounts that had been deactivated before the true-up date. Similarly, Redress found several server installations flagged in the true-up were spun up in Azure for testing and then shut down, meaning they potentially fell under existing Azure credits or shorter-term licensing, rather than needing a full EA license commitment. This data-centric review provided solid evidence to challenge portions of Microsoft’s report.
2. Strategic Stakeholder Engagement: Redress advised the legal provider on approaching Microsoft and its reseller with the findings. With the client’s CIO and in-house counsel, Redress crafted a formal response to the true-up report, outlining the specific points of contention. They highlighted the firm’s proactive compliance efforts and long relationship with Microsoft, setting a cooperative tone. At the same time, they made it clear which charges were viewed as disputable or excessive. For example, Redress documented that the firm had already reassigned or removed many of the licenses in question once those users left, and provided timelines showing that certain servers were only active for a short duration. This collaborative but firm communication opened the door for dialogue rather than a forced payment.
3. Negotiation and Concession Strategy: In preparation for negotiations, Redress leveraged its experience in Microsoft contract discussions to identify where Microsoft had flexibility. One tactic was to discuss the upcoming EA renewal: the firm was prepared to commit to a new three-year agreement, which Microsoft’s representatives knew was valuable. Redress argued that the true-up issues should be smoothed out as part of a renewal package. Concretely, the team proposed several concessions:
   • Waiving charges for the deactivated user accounts, since those licenses would not be carried into the renewal (essentially requesting a retroactive true-down for those users).Applying an Azure credit for the transient server usage, or counting that usage against the firm’s existing Azure consumption commitment, rather than billing it separately as an EA true-up cost.This will allow the firm to immediately purchase a lower-tier license (E3) for certain users in the future
   , credit the difference in cost, and acknowledge that E5 was over-provisioned for those users during the year. As a goodwill measure, the firm agreed to provide a discount on any new licenses it agreed to add, given the rapid changes during the merger year. Redress and the firm’s negotiators presented a compelling case that it was in Microsoft’s interest to accommodate these requests to secure the renewal. They backed their position with data from the validation step and with references to Microsoft’s licensing policies (for example, pointing out that the EA program is intended to offer flexibility for growing companies, and that the firm was simply asking for reasonable flexibility in this unique scenario).
4. Resolution Agreement: After several rounds of discussion, Microsoft and the customer agreed. Microsoft acknowledged the unusual circumstances of the merger and the firm’s good-faith efforts to stay compliant. In the settlement, Microsoft agreed to forgive or credit a substantial portion of the original true-up charges. Specifically, all charges related to the 150 deactivated users were dropped (saving the firm an immediate ~$180,000), and a one-time credit of ~$100,000 was issued to cover the short-term server usage and license mismatches during the transition. Furthermore, Microsoft extended concessional pricing on the additional licenses the firm needed moving forward, effectively reducing the per-license cost in the renewed EA. Redress helped document this agreement in writing, ensuring that the concessions were clearly stated as part of the renewal order form and that the client would not face the same items in dispute again.

Results

• Successful Dispute Resolution: The legal services provider avoided over $300,000 in immediate true-up fees initially assessed. What started as a potentially adversarial dispute was resolved amicably through data-driven negotiation. Microsoft’s concessions meant the firm only paid for legitimate growth in usage, not for the temporary anomalies that had inflated the original bill. This outcome validated the company’s decision to challenge the findings rather than accept a costly invoice.
• Cost Savings and Credits: The firm realized significant cost savings: roughly 60% of the disputed charges were waived or credited. The final true-up payment was a fraction of what was first demanded. Additionally, the negotiated discounts on new licenses for the renewal will save the firm an estimated $200,000 more over the next three years of the EA. These savings are crucial for a mid-sized firm operating on tight budgets, directly improving the bottom line.
• Improved Contract Terms: The new EA renewal contract was signed with more favorable terms. Thanks to Redress’s efforts, the agreement now includes a clause allowing the firm limited mid-year true-down adjustments in cases of divestiture or staff reductions – an uncommon but valuable flexibility. Also, Microsoft provided price locks and capped increases on certain licenses, giving the firm predictability and protection against future cost spikes. These concessions set a precedent that the client can carry into future vendor negotiations, knowing that contract terms are negotiable with the right approach.
• Enhanced Compliance and Asset Management: The firm strengthened its software asset management practices throughout the process. The internal audit and the need to defend usage data led to better tracking of licenses and more regular internal true-up checks. With Redress’s guidance, the IT team implemented quarterly reviews of Office 365 and server deployments to proactively catch any over- or under-licensing issues. This means the company is far less likely to face surprises in annual true-ups. The dispute experience raised awareness at the executive level; the CIO and CFO will institute joint oversight on software licensing changes in the future, combining IT knowledge with financial oversight.
• Maintained Vendor Relationship: Importantly, the negotiation was handled professionally, preserving the relationship with Microsoft. By focusing on facts and long-term partnership, the firm came away with a financial win and Microsoft’s continued support. The EA renewal process became a collaboration rather than a conflict. The client received assurances from Microsoft of enhanced account management attention to prevent future misunderstandings. In the legal industry, where trust and reliability are key, having Microsoft remain a cooperative technology partner was a significant intangible benefit of the process.

Quote from the CFO:

“When we first saw Microsoft’s true-up report, our jaws dropped – it was a huge unexpected expense. We knew something wasn’t right. Redress Compliance stepped in and calmly unraveled the mess. They validated our usage data and negotiated firmly yet fairly with Microsoft. The result was better than we hoped: most of the disputed costs were wiped away, and we even got improved terms in our new agreement. I was impressed with how Redress turned a tense situation into a win-win resolution. We saved a lot of money and learned how to avoid this problem in the future. It was like having an expert negotiator and licensing guru on our side, ensuring we weren’t overcharged and that our voice was heard by Microsoft.”

Key Results:

• Disputed Charges Waived: ~60% of the initially billed true-up cost was forgiven (over $300,000 in fees avoided).
• Financial Outcome: Achieved a six-figure cost reduction in the true-up settlement and secured an additional $200,000 in savings through discounts in the EA renewal.
• Contractual Gains: Obtained more flexible EA terms (e.g., limited true-down rights and price protections) that will prevent similar disputes and costs in the future.
• Compliance Oversight: Implemented improved license tracking and quarterly internal true-ups, ensuring transparency and preventing surprise overages.

This case demonstrates Redress Compliance’s ability to secure favorable negotiation outcomes for clients in the legal industry, even in challenging true-up disputes. By combining rigorous data analysis with skilled negotiation, Redress helped an Illinois legal services provider protect its interests and achieve a fair, cost-effective result in its Microsoft EA, turning a potential costly conflict into a successful resolution.