In-House Counsel

Games Corporations Play

Law firms are funny, if you have the right sense of humor -- and corporations are funny too.

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dartboard pen inside straightLaw firms are funny, if you have the right sense of humor.

But corporations are funny, too.

If you have the right sense of humor.

Consider this:

“The second half of the year is a disaster! Do everything you can to reduce costs! Delay hiring people! Don’t authorize any travel! The end of the world is nigh!”

Okay, you think. I’ll do whatever I can to reduce costs. I’ll postpone hiring people. Current employees will work too hard, and a few projects will be postponed, but everyone’s been asked to help the cause. I’ll do my bit.

And you do great. When December 31 rolls around, your department is 20 percent under budget for the year! Everyone’s exhausted, but you did your share.

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Then the time comes for setting budgets for next year.

“We’re basing your budget for next year on your actual expenses for last year. You were 20 percent under budget last year, so you’ll be budgeted for 20 percent less next year.”

“But last year was exceptional. The end of the world was nigh. We postponed hiring critical personnel and postponed a bunch of projects to deal with the emergency. You can’t set our budget based on our actual numbers from last year. We have to get funded based on the budgeted numbers for last year.”

“Sorry. We’re doing this across the board. Everyone’s being budgeted based on last year’s actuals.”

“That means that people who didn’t help save money last year are rewarded this year.”

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“What’s our next topic?”

See? Corporations are funny.

Or consider this:

“Q4 is a disaster! Do everything you can to reduce costs! We can’t disappoint the street! The end of the world is nigh! Postpone every conceivable cost!”

Okay, you think. I’ll do whatever I can to reduce costs. For every case that you have a fair chance of winning (and you therefore haven’t yet taken a reserve), you postpone events that might prompt you to take a reserve. You push back trial dates into Q1. You postpone hearings on dispositive motions. You postpone mediations. If we have to reduce costs in Q4, I’ll do my bit.

And you do great. When December 31 rolls around, you’ve beaten your budget and improved the numbers.

The chickens, of course, ultimately come home to roost. All those Q4 items that you pushed back to Q1 will hit in Q1. So Q1 is a little disappointing.

“What the heck happened? Q1 is a disaster! How could you have missed your budget by so much in Q1?”

“You told us to save money in Q4, You can’t avoid expenses indefinitely. Everything we avoided in Q4 hits us in some later quarter.”

“I don’t remember Q4; that was then. But I sure noticed Q1! And you can bet that, come bonus time, I’ll continue to remember Q1. What a disaster!”

Fortunately (for me), of course, I just make this stuff up. The joint where I work is pretty sensible.

If you’re lucky enough to inhabit a place like that — where people are sensible and logic prevails — then you don’t have to worry about the green eyeshade guys running the joint. You can explain that you simply did what the corporation requested of you in the past, and you shouldn’t be punished for that now.

But less sensible places will soon find employees reluctant to work for the common good.

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 [email protected].

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