5 Ways Reporting Differs At Law Firms And Corporations

Welcome to the in-house life.

dartboard pen inside straightAt law firms, reporting about cases is common sense.

You tell people what matters to them, or what a reasonably curious person in the listeners’ position would want to know.

Simple.

At corporations, reporting is not nearly as intuitive.

“I settled the case for a bargain price!” reports the lawyer who just joined a corporation from a law firm. “The plaintiffs sought $300 million. Their opening demand was $50 million. And I got us out for $1 million. How do you like them apples?”

“That’s great! That’s an extraordinarily low price for that case! Did you tell people that you saw it coming?”

“Huh?”

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“Oh. In the corporate setting, we try to let people in the relevant business unit, and in finance, know in advance when they’ll have to make a payment. Even if we haven’t reserved anything for a case, you sometimes see an event — a scheduled settlement negotiation, a trial, a mediation — that makes you suspect we might be spending money on a claim. We can often give the business advance notice that an expense is in the offing. Did you tell people a few months ago that this might happen, so the $1 million expense doesn’t come as a surprise?”

“Shoot. I didn’t think of that.”

“No problem. You’ll remember next time.

“By the way, did you get approval from the CEO to settle the case for $1 million?”

“Huh? I spoke to the person who runs this business unit, and she said it was okay.”

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“Oh. In the corporate setting, we have levels of approval for everything. The person who runs the business unit has authority up to $750,000, but you have to go to the CEO for $1 million. The business person really shouldn’t have forgotten that, but you should remember, too. You need the right authority to settle a case.”

“Shoot. I didn’t think of that.”

“No problem. You’ll remember next time.

“By the way, did you get approval from the right person in the law department to settle the case?”

“Huh?”

“Oh. In the corporate setting, we also have requirements for approval in the law department. For every settlement, someone in the law department must grant authority. Up to a certain amount, lower-level people have approval authority. As the settlement amounts go higher, more senior people must approve. For settlements over $750,000, you need the general counsel’s approval to settle a case.”

“Shoot. I didn’t think of that.”

“No problem. You’ll remember next time.

“By the way, did you tell finance that you’ve settled the case?”

“Huh?”

“Oh. Finance accounts for expenses. So you really have to notify finance when you settle a case, so finance can build it into the quarter’s numbers. We hope finance doesn’t overlook expenses like this, but just to double-check them, we send them notices whenever we settle cases for more than $500,000.”

“Shoot. I didn’t think of that.”

“No problem. You’ll remember next time.

“By the way, did you tell treasury that you’ve settled the case?”

“Huh?”

“Oh. Someone has to actually write a check to pay the settlement amount. The folks who handle cash flow like as much warning as possible that they’ll be cutting a check, just to be sure that cash is available when it’s needed. We project cash flow quarterly, and we give treasury as much notice as possible when we’ll be asking them to pay money.”

“Shoot. I didn’t think of that.”

“No problem.

“Welcome to corporate life.”


Mark Herrmann spent 17 years as a partner at a leading international law firm and is now responsible for litigation and employment matters 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.