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A new survey from Proskauer Rose shows how legal departments are handling labor and employment budgets and staffing.

Most legal departments that set aside a budget for labor and employment matters are not meeting those budgets, as unpredictability in claims and higher than anticipated costs have in some cases pushed budgets up, according to a survey released Wednesday.

The survey from Proskauer Rose, the second that the firm has done, was conducted in early 2017 and gathered feedback from more than 300 in-house legal decision makers and labor and employment specialists. The respondents came from a variety of industries and more than half work at companies with over 1,000 employees.

Only 36 percent of respondents said that their departments met their L&E budgets in the last year. Some 26 percent spent more than expected and 14 percent spent less. Interestingly, the rest of respondents had no set budget for labor and employment.

Elise Bloom, co-chair of Proskauer’s labor and employment department and co-head of its class and collective actions group, said in a press release announcing the report that in-house counsel working on employment matters for their companies are working to get the most out of their dollar as L&E challenges shift and evolve.

“With the focus on federal deregulation, there has been an increase at the state and local levels surrounding the scope of protections under the discrimination, leave and wage-and-hours laws,” said Bloom. “With the continuing pressure to do more with less, the survey provides information on how in-house lawyers are allocating intellectual and financial resources to manage labor and employment matters and increase the value added to their business partners and organizations.”

The survey indicated that companies are spending about one-eighth of their outside legal budget on L&E per year, an average of around $500,000. But spend varied across industries. Financial services, according to the survey, had the highest median spend per employee on labor and employment at $393 per head. At the low end was health care, with a median spend of $52 per employee.

Among companies in the survey, the average size of the legal department was 20 lawyers, three of whom were involved in L&E work and only one of whom was entirely devoted to this area. On average, it took until the company reached 2,000 employees for a lawyer to be assigned to L&E matters full time and until the company reached 5,000 employees to add a second in-house employment attorney. In the past 12 months, only 11 percent of respondents’ companies had hired another lawyer to focus on L&E.

Other findings from the survey include:

  • Nearly three-quarters of respondents said they received threats of L&E litigation from opposing counsel over the last year. One in five said they have dealt with a class action and one in two have dealt with L&E suits that were not class actions.
  • Discrimination was the most common claim in the survey, and 40 percent of respondents predicted an increase in this type of claim in the future. Wrongful termination was second most common, with 34 percent expecting these claims to become even more frequent. However prevalent though, these claims weren’t the most disconcerting to respondents–they were most worried about wage-and-hour claims, perhaps because these claims are more likely to be class action suits.
  • More than three-quarters of respondents met with the head of human resources on a regular basis. Some 42 percent regularly participated in HR department meetings.
  • Many respondents–47 percent–provide input to the board of directors. But only 9 percent sat on the board, and almost all of these individuals were general counsel. None were in-house labor and employment attorneys.

Rebekah is the editor of the In-House Desk at American Lawyer Media. She and her team work on telling stories about corporate legal departments and what makes in-house lawyers tick

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