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King is not alone in her efforts to rein in costs. “Cost pressures them, “Here’s the mission and the problem we need to solve.
remain a primary concern” for chief legal offcers, impacting We need everybody’s help and everybody’s ideas.” Chances are
both internal budgets and external counsel fees, according to it will generate solutions you haven’t thought about.
the 2016 Chief Legal Offcer Survey by U.S. consulting frm Alt- More importantly, though, “you are going to get that cama-
man Weil, Inc. raderie that you need as a legal department” to get through the
The survey found that 27% of law departments had de- process, he says. “The rest is just the algebra of budget analysis.”
creased their internal budgets between 2015 and 2016, the high- However, he stresses that if the cuts are severe and it looks like
est number since 2011-2012, when almost 28% reported a de- the axe will fall on jobs, you “need to get ahead of that story…you
crease. Moreover, almost 41% report that their external counsel need to tell people that’s a possibility.”
budget declined.
So how do you prepare and cope when the economy turns 3. Be Creative
and the budget axe falls? That’s a question we put to in-house
lawyers, and here are seven factors to consider to prepare for— One of the challenges with managing legal issues in a downturn
and manage—a budget cut. is that there often isn’t much to cut when it comes to internal
budgets. Many departments are already lean, and much of the
1. ContingenCy planning is C ruCial work is core to the company’s operations, making it hard for
legal departments to fnd savings “The budget is dependent on
It’s not a matter of “if” you will experience a budget cut as much the normal cost of operations,” observes Grant Borbridge, Vice
as a matter of “when,” experts say. King says general counsel President, Legal and General Counsel at MEG Energy.
cannot afford to cut on the fy. She urges having a sense of what The greatest fscal challenge, he says, arises with “special
happens if doomsday arrives. items”—events such as an unexpected piece of litigation or a
Be prepared and have a contingency plan ready. fnancing opportunity. “The big fuctuation is with these special
Call King overly cautious if you like, but each year she devel- items. When they pop up, there is nothing to be done except to
ops two budgets. There is her “Blue Sky” budget—the playbook do the work.”
that she hopes works out—and her “Brown Sky” budget— Chances are the work will be done by external counsel and in
which covers the worst-case scenario. that case, he says, “we try to bid it out to make sure we are going
“I prepare both those scenarios so that I am truly prepared if to get a good rate.”
the market turns and I know where to cut costs.” In terms of litigation, there is a new option in Canada: litiga-
tion funding. “Litigation funding is an innovative way to ad-
2. Don’t fly alone vance litigation, without any upfront cost,” according to Naomi
Loewith, Investment Manager and Legal Counsel at Bentham
IMF, a leading funding company with 11 offces throughout the
Budget cutting is a team process. Flying world, which opened its Toronto offce in January 2016. “A liti-
solo is a sure-fre way to crash and burn, gation funder will typically pay counsel fees and disbursements,
lawyers say. sterling Miller explains, “It’s as well as any court-ordered costs. If the case is successful, the
not something that general counsel can funder receives a portion of the recovery. The funding is non-
keep to themselves and try to manage recourse, so if the case is lost, the client does not pay anything.”
without bringing in the whole team. “It can allow counsel to advance claims that might other-
You need to get everyone involved.” wise be left on the table and secure returns for the company,”
she explains. “By way of example, the company may believe that
Miller would know. He spent 20 years as in-house its supplier has breached their contract, but may elect not to
counsel in the travel industry and went through “sev- pursue the claim because of the cost and risk of litigation. With
eral” budget-cutting experiences—to the point that he the beneft of litigation funding, the company can eliminate this
had a “pretty well developed process.” Now General Counsel at cost and risk, while recovering for the breach of contract and
Marketo, Inc., a marketing automation and engagement com- protecting its reputation in the industry.”
pany in the U.S., Miller runs the blog, “10 Things You Need to
Know as In-House Counsel,” which covers an interesting range 4. gooD Data is CritiCal
of topics relevant to internal lawyers.
Miller says he had his greatest success by being open and There are two key elements to most legal budgets: the internal
transparent with his team when it came to budget cuts. Law- legal spend and the external legal spend. When tackling costs,
yers are problem-solvers, he explains. Level with them and tell you need to understand where you currently spend your mon-

18 CCCA MAgAzINE | FALL 2017 AutOMNE