Legal Savings Needed - STAT!

In early January, I read an interesting piece by Susan Hackett of ACC wherein she laid out a few tips for GC’s on weathering the economic storm. Although things are beginning to look up (for some), lots of questions remain about 2010. Many of our in-house comrades have weathered or are currently going through the budgeting process; the open questions about the upcoming year have made that process almost like shooting at a target in a dark room.

Despite this cloud of uncertainty, it seems there remain a few things that every GC and budgeting lawyer should focus on as we move through the last few months of 2009. During my time as a GC (and admittedly, I’m a list building, check it off, constant evaluator type) I regularly went through some of the exercises below to help determine if our department (and company) was meeting its objectives.

1. In the short view (the next two months), are you going to hit your budget projections? If not, your high-volume, repetitious work could provide the relief you need. There are short-term fixes that can turn into long-term solutions, too … e-discovery, contracts, employment matters, etc. – there are simple measures you can take to generate significant savings quickly.

2. In 2009, there were never-before-felt pressures on legal departments to cut costs, and a response to these pressures was not only expected, it was demanded. Now is a good time to review those measures. What was the impact of cost-cutting on your ability to protect the company from the multitude of risks, known and unknown, that it faces every day?

3. Of the adjustments made during the economic downturn, which are worthy of making a permanent part of your daily practice?

4. Did your department thrive in the current environment or did it just manage to survive? What can you do to enrich the atmosphere during good and bad times?

5. Value has been defined as receiving a solution to a legal problem that addresses that problem for an appropriate cost. Now is the time to conduct a review of the department’s various 2009 initiatives and determine whether value was received for each of those initiatives. If not, there is no better time to fix that problem than budgeting season.

6. Although no one among us likes to think about a layoff once it’s over, now is the time to revisit that event. You have to ask yourself: Was it worth it? Did you really cut costs or did you simply move those costs from one silo to another? If you lost two or three excellent in-house attorneys to a lay-off -- only to replace that expense with an increase in outside counsel fees in order to get the work done -- that reality must be confronted.

7. Did you make appropriate use of outsourcing opportunities? If you are not looking at various ways of using outsourcing (such as contract attorneys), you should.

Of course, these items on this list are just part of the multitude of decisions and thoughts GCs encounter every day, but it really speaks more to the mindset in-house attorneys are moving towards: value. Value is everything in today’s legal landscape, and there are some quantifiable, transparent ways to determine if you’re receiving it.

'Fundamental Transformation' in the Legal Profession

“This car is leaving with or without you.”

I almost could hear my mother’s voice in my head as I read an article in last week’s ABA Journal Weekly Newsletter reporting that the legal profession may be on the cusp of a "fundamental transformation." While many law firms have experienced increasing profitability over the last two decades, they now are being forced to lay-off associates and other staff as their work (and revenues) dwindle. According to Richard Susskind, legal futurist and author of The End of Lawyers?, this change is being promulgated by law firm clients, who are becoming increasingly more sophisticated and discerning when farming out their legal work.

Legal costs are a line item that is an easy target. While other departments of many corporations have benefited from the use of new technology and efficiencies for years, a legal department’s MO has remained relatively unchanged – until recently. Susskind explains that clients now outsource much more of their legal work and are forcing their traditional law firms to collaborate with other legal services firms and vendors. He even suggests that there could be a trend internationally towards more non-lawyer management of legal businesses, which would likely result in the integration of online legal services and the automatic generation of documents.

Many clients, who remain anxious about sending their legal work overseas, are turning to domestic businesses like Counsel On Call to provide attorneys at a fraction of the hourly rates of traditional law firm lawyers. And, unlike law firms, we are accustomed to integration and better positioned to offer flexible, tailored solutions to corporations interested in taking advantage of new technology and efficiencies. As Susskind says, "clients [now] see that legal services can be delivered more cheaply, efficiently, quickly, and to a higher quality using new methods and business models."

That being said, often the toughest question to address is “I know I have to cut costs, but how do I actually do it?” It’s difficult to know where to start, but that’s where we come in. I have been meeting with a lot of in-house department heads and GCs in recent weeks, taking an hour or two to go over spending and budgets and identifying areas where we can create savings and efficiencies in 2009. If you do the same, it will undoubtedly be the most profitable time you spend all year.

Just remember, you’re driving the car. We’re there to make sure it’s a good ride.