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.