Current design practice for pipe-seabed interaction in soft soils is generally based on the assumption of undrained behaviour throughout laying and subsequent operation. In reality, drainage and consolidation around a partially embedded pipe can have a marked effect on the vertical penetration and horizontal breakout resistance. In this paper, a large-deformation finite element methodology coupled with the "modified Cam clay" plasticity soil model has been developed to study the coupled consolidation behaviour of soil around partially embedded seabed pipelines. Simulations of penetration show that after laying, subsequent consolidation leads to further embedment by an amount dependent on the level of drainage that occurred during laying. Also, if the pipe is embedded under undrained conditions, the waiting period between laying and operation allows the soil around the pipe to consolidate under the pipe self-weight. The consolidation process results in an increase in the strength of the soil. The lateral breakout resistance and the direction of pipe movement on breakout thus depend on the consolidated strength of the soil around the pipe, as well as the applied loading. The envelopes of vertical-lateral combined loading bearing capacity differ markedly from those predicted assuming undrained behaviour throughout.