My friend Pam Woldow of Altman Weil just posted “An Open Letter to the General Counsel.”  It is must-read material if you are an inside lawyer.  See if you identify with any of these comments made to Pam in an interview with a GC of a major transportation company:

1. “My legal budget has been drastically reduced, and if my legal spend exceeds budget, my management has made it clear that I’m toast.”

2. “A logical cost-cutting step would be to move my matters to smaller non-New York white shoe firms whose rates are better and whose service seems competent (and which often offer superior responsiveness, too).

3. “But if any of these smaller firms messes up an engagement — or even if they actually do a good job but the outcome is disappointing — my management will roast me for not engaging the ‘best’ firm.”

4. “The ‘best’ firm may not be able to produce a better outcome, but at least their reputation offers me the defense that ’no one could have produced a better result.’ And my selection judgment remains unimpugned, even if my budget takes a beating.”

5. “So all in all, it’s safer — at least in the short term — to keep all my matters with high-credibility, high-priced firms. Furthermore, by maintaining the status quo, at least I don’t have the logistical hassle of moving my business and setting up new counsel-relations protocols. At the end of the budget year, though, I’m gonna get killed.”

 

From my vantage point, I’ve seen this “damned-if-you-do-damned-if-you-don’t-paralysis” too many times.  And as the innovators who left the big-name brands, we find ourselves on the losing side of this affliction.  Pam’s letter offers realistic, precise advise on how to address the competing budget and safety concerns. 

While there is more involved than this, the crux is to distinguish between “bet-the-company” matters and more ordinary course matters.  Show show your fealty to brand on the true “bet-the-company” matters where senior management is more likely to have a stake or awareness.  But isn’t ordinary course precisely where you should be demonstrating you interest in your budget?  Doesn’t it look better to the powers-that-be if you can show you’ve taken some smart, innovative steps to save money?  Keep in mind that 97% of all matters settle, and I suspect for many companies, that number is closer to 100% for these kinds of cases. 

The risk of the status quo is that you’re “gonna get killed” or will be “toast.”  The risk of change is …..?  At some point, one needs to reflect on Albert Einstein’s definition of insanity.