Seven reasons why law departments do not take dramatic action against costs

Jordan Furlong writes clearly and persuasively about three telling reasons why general counsel haven’t sharpened their cost-cutting knives. Midway through he summarize his reasons: “I actually think the first two reasons account for most of the problem: GCs are under-incentivized and overburdened by distracted bosses. But even if and when those issues get resolved, we have a third obstacle: in practical terms, how do you rationally reconfigure the legal services supply chain without destroying it in the process?” The comments to his post are worth reading also.

Let me offer four other obstacles to dramatic change by legal departments.

1. Nearly all general counsel come from law firms, where often they were very successful as partners, so they know no other business model for firms.

2. Change is discomforting at best and nightmarish at worst, so why undertake it? Couple that with a predilection for risk aversion among lawyers and logjam is too kind a work.

3. Even well-intentioned and well-executive initiatives to reduce spending founder on the bolt-out-of-the-blue major investigation, merger, class action, or patent infringement suit. So why bother.

4. Most general counsel spend less than 15 percent of their time on management of the legal department, so whatever cost-saving energy they have is limited and – to be fair – generally peripheral to their main concerns.