1. Cut outside counsel costs
2. Reduce internal headcount
3. Reduce spending on operational effectiveness projects
4. Analyzing and leveraging the firm's product mix also means seeking out opportunities that come as a direct result of the recession itself. Bankruptcy services are an obvious example.
5. Trying short-term, guerilla promotional activities to build the business. Some of these are obvious: newsletters, seminars and ads sponsoring local civic or charitable organizations.
6. "Integration" - This means utilizing various promotional tools in a synergistic manner so as to maximize the effectiveness and cost efficiencies. For example, one might host a live or Internet seminar as a means of getting prospects. This is also a means of developing a database of individuals and companies for the firm's e-newsletter mailing list.

Having faced financial pressures in the past, general
counsel have developed a set of tactical responses.
While these tactics may still deliver short-term
results, their utility in providing sustainable cost
savings is often limited and somewhat problematic
in today’s economy.

Common Tactic #1:
Cutting Outside Counsel Costs
The legal industry survey mentioned previously
reported outside counsel costs as one of the two top
general counsel concerns for 2009. Traditionally,
seeking discounts and rate freezes from outside
counsel has been the first course of action when
budgets were tightened. While this tactic has some
merit, the actual benefit is not as great as one might
initially think. Decreasing or freezing hourly rates
does not necessarily result in a decrease in the
average hourly rate unless there is a concurrent
evaluation of the total number of billable hours and
the allocation of those hours across resource level
for the type of work.
Another tactic used by some general counsel to
control outside counsel costs is seeking alternative
fee arrangements that make costs more predictable.
(The unpredictable nature of legal spending was
reported as the other top concern of general
counsel for 2009 in the Altman Weil survey.) The
problem with this approach is that while alternative
fee arrangements may deliver predictability, they
don’t always result in cost reduction. Alternative fee
arrangements are often based on the premise of rate
discounts, which do not focus on determining the
appropriate number of hours and the staffing level
needed to deliver desired results.
In comparison, Huron’s cost management methodology
can deliver sustainable cost savings for general
counsel, in the range of 15 to 40 percent, by focusing
on actual services delivered, validating hours, and
reducing the average blended hourly rate.

Common Tactic #2:
Reducing Internal Headcount
Reducing internal headcount is another costcutting
tactic historically used by general counsel.
Traditionally, headcount reduction is based on
factors such as performance levels, tenure, compensation
level, and historical workloads. But the
problem with this approach is that it may not take
into account changes in future workload resulting
from the current economic environment. Industry
trends indicate that headcount reduction using the
traditional approach is typically followed by an
increase in outside counsel spend over time, as work
that was performed by internal resources is sent to
outside counsel. The traditional approach also may
not factor in the answers to questions such as:
• What work does not need to be performed?
• What work should be performed by what
level of resources?
• What work should be performed by internal
versus external resources?
• What work can be streamlined through the
implementation of standard processes?
• What work can and should be leveraged by
process-driven technology?
When thinking about using headcount reduction as
a cost-cutting tactic, consider that the ratio of outside
counsel spend to in-house counsel spend shows
a downward trend from 2.0 in 2004 to 1.29 in 2007,
according to the Association of Corporate Counsel’s
2008 “Managing Outside Counsel” survey.

Common Tactic #3:
Reduce Spending on Operational
Effectiveness Projects
Another conventional cost-cutting method used by
general counsel is to reduce spending on strategic
projects that are focused on improving the legal
department’s operational effectiveness. Spending
on such projects is viewed as discretionary and
therefore is often among the first items to be cut
under budgetary pressures. The recent legal industry
cost control survey3 indicates that 35 percent of
general counsel will attempt to control costs by
delaying a technology purchase.
While this approach will reduce the budget in the
short term, it will also delay the opportunity to
reduce overall spending by greater margins on a
sustainable basis. In fact, in burdensome budgetary
times, implementing automated financial, contract,
or matter management tools may bring a decided
benefit. If implemented correctly, the capital cost of
such systems is a fraction of the savings generated
as a result of the operational improvements gained.
A financial and matter management system implementation
at one of Huron’s clients paid for itself
in just three months after rollout and generated 10
percent cost savings over a 12 month period.
Although any or all of the above tactics can certainly
be helpful in cutting budgets to meet corporate
mandates, the best “bang for the buck” will not be
achieved with hit-or-miss point solutions. Instead,
what today’s tough times demand is an overall
strategy, built with a careful methodology, that
factors in the existing operational environment,
the need for tighter budgetary control, and future
workloads.

Once on a panel, redouble your efforts to stay on it. Panels are being reviewed less frequently but many general counsel expect them to shrink.
Address the way your firm bills for its services. Cost control will be a key issue for corporate counsel during times of economic difficulty. What
in-house counsel need when justifying their legal bills to their employers is predictability and transparency.
Be prepared for more detailed and comprehensive panel selection processes as procurement professionals become more involved in the appointment of law firms, and general counsel use more professional procurement techniques.
Invest in technology. The use of technology as a tool for delivering class-leading client service is growing rapidly and may yet revolutionise the legal services market.