The 7 legal matters most likely to bust the budget and the top ways in-house lawyers respond [newly published data]
Tax, employment and litigation are the legal matters most likely to go over budget for private investment firms, and in-house lawyers respond by asking law firms for discounts, challenging line items and delaying payment.
How often do law firm invoices exceed the initial budget estimate? In-house lawyers working in private equity and venture capital say it happens quite a bit.
That’s according to an independent survey of 300 in-house lawyers working for such investment firms that we commissioned.
The researchers asked respondents, “Do the invoices you receive from law firms ever exceed the estimate?”
More than three-quarters (78%) say this happens some of the time. This includes nearly 4 in 10 that said it happens “always” (16%) or “often” (23%).
7 legal matters most likely to go over budget
The survey next asked which matters are most likely to go over budget. Here’s how their answers – which haven’t previously been published – stacked up:
- 54% said tax;
- 45% said employment;
- 40% said litigation;
- 35% said fundraising/fund structuring;
- 32% said regulatory;
- 24% said investor negotiations and due diligence; and
- 18% said M&A due diligence.
Responding to higher-than-expected law firm invoices
The research team also asked those respondents how they deal with higher-than-expected invoices from law firms. Here’s what the survey found:
- 50% said they negotiate discounts;
- 43% challenge line items;
- 36% said they send these invoices to external bill review provider;
- 32% said they delay payment;
- 28% said they reject the entire invoice; and
- 17% said they refuse payment.
None of this is good for the relationship between inside and outside counsel. It adds unnecessary friction – especially since clients hiring law firms for high-end legal work aren’t especially price-sensitive. As the report on the survey concluded, timely, transparent and predictable law firm invoices beat lower fees.
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The complete survey report is freely available for download here: The pursuit of control in legal spending.