I love budget whack-a-mole. It makes life so much easier. You can pretend to cut costs, without actually sacrificing anything.
“I know we’re obligated to cut our budget by $2 million this year. It really stinks. I suppose we’ll have to lay off Jarndyce.”
“But Jarndyce is a great executive assistant.”
“Wait! I’ve got an idea. Jarndyce supports both Summerson, a lawyer, and Clare, who’s in the business. Why should our budget pay for Jarndyce? Suppose we just transfer the cost of Jarndyce to the business unit budget. We’ve saved 70 grand, and we’ve still got Jarndyce!”
Perfect!
Unless anyone were actually interested in saving the corporation money.
It’s budget whack-a-mole!
It happens wholesale when you think about cutting lawyers.
“Two million? That’s a ton of money. Where will it come from?”
“We’ll have to cut something like seven lawyers.”
“Jesus; that’s impossible. If we’re short seven lawyers, how will we do the work?”
“Oh, that’s easy! We’ll just hire outside counsel to do the work for us.”
“How much do you suppose that will cost?”
“Seven lawyers times 2,000 hours per year. That’s 14,000 hours. Suppose we get a firm to agree to do the work for $500 an hour. We’ll pay $7 million.”
“We’re cutting $2 million in expenses, but we’ll incur $7 million in replacement costs?”
“Sure. We’ve been told to cut costs, so we’re meeting our goal. And the replacement cost of outside counsel will be paid by the business units that are requesting the lawyers’ services, rather than the law department, so the law department will have saved the money.”
“Are you sure that’s kosher?”
“As kosher as the day is long. That’s budget whack-a-mole.”
Mark Herrmann spent 17 years as a partner at a leading international law firm and is now deputy general counsel at a large international company. He is the author of The Curmudgeon’s Guide to Practicing Law and Inside Straight: Advice About Lawyering, In-House And Out, That Only The Internet Could Provide (affiliate links). You can reach him by email at inhouse@abovethelaw.com.