More on Reserve Setting

Two more thoughts, after my rant on reserve setting and law firm budgets.  A transportation company law department I consulted with negotiated a deal with the Finance Department.  “If we can invest in a better matter management system, which thereby reduces our projected litigation expenses, and you can then release some of the reserve, will you let us spend a bit of it on license for the system?”  The deal was struck, the legal department gained a cost control tool, and the company lightened its litigation reserves.  Pretty neat!

The second thought, coming from a major insurance company, has a different twist.  There, the law department controls the litigation reserve, so that the department has more of an end-to-end oversight on legal costs.  I don’t know much more than that, but I have not heard of such an arrangement before.   

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