A speaker at the recent InsideCounsel SuperConference made a point about budgets from law firms. He said that if the expense for that law firm is charged back to a business unit, it is even more important to get the budget right. If the law department pays for law firm’s services and it goes over, the department can make some adjustments and “take the hit.”
I favor chargebacks to clients but this dynamic could lead from both sides to higher budgets submitted by the law firms. If neither the law department counsel who review bills and stand behind budget estimates nor the outside counsel want irate business clients, they will slip toward building in some padding.