April/May 2010 / Features
Downturn Drives Legal Department Innovation
Concerns about law department costs must be balanced against the value imperative. Striking that balance is the fundamental role of the in-house legal function. An organizational structure that supports the most effective way of delivering services equals cost savings.
According to the 2009 Hildebrandt Law Department Survey, the median number of lawyers per billion dollars of revenues in the United States is 3.8, but this number can be impacted by variables including industry sector and company size.
More than three-fourths of law department cost is lawyer and staff compensation, and this should be the major target for cost reduction. “Pushing work down” to the lowest cost resource in the department is a long-established principle.
Some departments partner with their retired lawyers to address workload issues. In addition, cost-conscious arrangements with outside counsel can be advantageous both for firms struggling to keep good lawyers busy and law departments facing budget cuts. For example, law departments can negotiate an agreement to take a senior associate on loan for a fixed period at discounted rates.
In-house lawyers should look hard at work that has crept into the law department masquerading as legal work. Law departments often can partner with their business clients to redistribute responsibility for some legal work, enabling lawyers to focus on higher risk and value areas.
