Sue or settle? A familiar question inside the boardroom. If there ever was a baseline period for corporate litigation, back then the answer might have bubbled up from a stock of company risk management philosophy, personalities and budget. Now, at what looks like the nadir of the greatest economic crisis of a lifetime, budgets have completed the move to the forefront. Today, budgets are what drives the answer to the question “Whither this litigation?” From corporate earnings to the legal department general ledger, and farther down to weedy line items for photocopying and travel, the law department balance sheet has never been so essential.
According to a recent economic analysis from the Federal Reserve, midway through 2009 unemployment, sales and investment in almost every economic sector have continued to fall. See “Fed Views,” Federal Reserve Bank of San Francisco Economic Research and Data, May 15, 2009; and “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” Federal Reserve Bank of Dallas, April 15, 2009. Within the legal offices of companies sieving any available cash from ledgers punctured by straight quarterly declines, the easy savings have already been taken. Additional discounts from law firms have been negotiated. Officer compensation structures have been revised to encourage legal managers into keeping costs down. New spending committees have formed for weekly reviews of legal department expenses. With this initial round of belt tightening already accomplished and with increasing calls from the accounting suite for even less spending, law managers now face a choice between cutting their internal staff or finding substantial additional savings in the external environment.
