Ethics and professionalism: Handling budget cuts with integrity

Cheryl Foy and Ken Fredeen call on in-house lawyers to submit their ethical dilemmas anonymously

Ethics and professionalism: Handling budget cuts with integrity

We’re offering this advice column to support you as you tackle ethical and professional issues. Go to to submit your questions anonymously.

QUESTION: In-house lawyers need to know the limits of their own skills and knowledge. We need to know when to go to external counsel for expert advice. At what point do budget cuts to the legal budget represent an ethical issue for the in-house lawyer? 

FOY: We received this question a few months ago, but it is particularly relevant in the context of additional economic pressures caused by COVID-19. At first blush, some in-house counsel might dismiss this and question why it is raised as an ethical issue. We all have to operate within budget constraints and the legal department has to do its part. We are a cost centre in most organizations and businesses, and we often have enough trouble demonstrating our value, so it’s difficult to push back and not appear to be team players when we’re asked to cut our budgets. All of this is true. However, it is possible that budget cuts or constraints can be so extensive that they compromise our ability to fulfil our professional obligations.  

One of the most important skills of in-house counsel is to know enough to spot legal issues outside of our areas of competence and to know when to seek advice from lawyers competent in the particular area.  

Our duty of honesty and candour to our clients is also founded in competence, in which experience is a key component. In-house counsel are pressured daily to give immediate answers to questions and it is tempting to do so. However, we shouldn’t give opinions if we don’t really know the answer because we don’t have expertise in that area of the law.  

So, what do we do in the face of severe financial, resource or other constraints? In short, we must do everything possible to preserve our ability to competently serve our client. Not only is it our obligation, it is essential to our credibility with our clients. Does this mean not taking budget cuts? Possibly. However, before refusing to take cuts, it means that we must be creative. Creativity can involve any number of things: 

  • Looking for efficiencies: This is an obvious first step and offers an opportunity to be strategic through the use of technology, partnerships with firms, streamlining processes, etc.;  
  • Becoming competent: Considering how to become competent, can you obtain training for you or a team member in areas where questions regularly arise?;  
  • Leaving room for case-by-case budget allocation: Agreeing to a budget but indicating that where expertise is needed you may need to seek additional funds on a case-by-case basis in order to provide competent advice;  
  • Declining to act: There are at least two contexts in which I have declined to act in a way that has not been detrimental : 1) Budget cuts — in the context of budget cuts, I have accepted the cuts but stated up front that this means that I or my team will be unable to provide service in particular areas, and; 2) Insufficient resources — where the department doesn’t have the capacity to properly advise, whether due to excess work, lack of knowledge or skills, it is best to decline to act. My advice is not to do it on an ad hoc basis but rather to do it by way of agreement with your president/CEO and your leadership team to get their buy-in in advance.   

FREDEEN:  In the worst case, we resign. Working back from that, the board will be an important backstop to management. Key to their support is for them to understand what you and your team do and why it is important. Gather your facts and be ready to succinctly state your case, including understanding where cutting corners resulted in lawsuits or regulatory issues. You also need to be realistic: Can you do things differently; at a lower cost; are there things you and your team do that are not priorities? But always be aware if the restrictions placed on you prevent you from discharging your responsibilities as, at some point, it is a place you need to leave. After all, the buck does stop with you.  

Recent articles & video

Complex, challenging, and rewarding: What drives Oatley Vigmond lawyers to excel in the space

Andrew Rudder successfully transitions from Big Firm to Solo Practice

Survey report highlights challenges and solutions for family violence cases in Nova Scotia courts

Suncor's David Kramer speaks about big deals, the energy transition and career advice

Lawyers must be increasingly aware of technological, geopolitical trends: software founder Sean West

Who made it to the 2024 list of top pro bono law firms?

Most Read Articles

BC Supreme Court rejects husband’s claim against wife’s counsel over family home sale proceeds

Crown attorneys share responsibility for Canada’s dysfunctional justice system

Lawyer salaries may vary more in wake of competition law changes: recruiter report

'We need to have the competence to question:' LegalTech panel on genAI fakes in the legal system