The recession’s downsides for law departments

Although the amounts paid to outside counsel by law departments may decline in line with a general drop-off in corporate activity, what remains of that spend may increase unjustifiably. In a cynical and untrusting frame of mind I conjured up inflated bills for to the following four reasons:

1. Padded bills (See my post of April 8, 2008: billing padding with 8 references.).

2. Overworked matters, which is different than bill padding. Bill padding I define as fraud – no work was done but hours were plugged in, whereas overworking matters means the time was actually put in, but it was not necessary or contributory.

3. Less carefully scrubbed bills by the billing partner (See my post of Nov. 8, 2005: write off time of new associates.).

4. Hours charged by lawyers who are too senior for such work (See my post of Feb. 12, 2008: senior associates filling in for junior associates.).

Another external downside that accompanies a recession are annoying cross sells as law firms forage for more work.

Internally, other downsides appear. The law department may suffer from terminations among its clients, which makes tasks harder to accomplish and possibly adds to the legal workload, as well as layoffs in the legal department itself (See my post of Dec. 6, 2006: are law departments particularly vulnerable to cost cutting; April 18, 2005: wave of cost cutting; March 16, 2008: layoffs in-house; May 5, 2008: repercussions of layoffs; March 1, 2008: Ford’s law department lost 32% of staff; and Nov. 20, 2005: Reuters legal team slashed by 20 percent.). Lawyers’ pay packets may feel the recession. For example, no raises, reduced matching of 401K contributions, or shrunken bonuses are likely shadows of the downturn.