Litigation budgeting and litigation billing live in two different worlds. Maybe it is time to bring the two together.
A typical budget plans for the major efforts along with an anticipated cost for each. For example, using round numbers, a budget might include a line item for 10 anticipated depositions at an expected cost of $5,000 each for defending and $15,000 each for taking.
The bills themselves, on the other hand, seem, at best, vaguely connected with the budgeted items. Years ago the American Bar Association came up with codes to push a breakdown of fees billed into litigation codes and activities. For example, an entry might be for “Drafting first interrogatories” with a litigation code of L310 (written discovery) and A103 (draft/revise). Combined with the extreme but now common practice of breaking time into six-minute intervals, clients using this system receive lengthy bills that are highly segmented and time-consuming to review.
Laudable as this effort was, it leaves something to be desired in allowing a managing in-house lawyer to efficiently stay on top of time billed by matter. Even more so, it makes tracking activities as they relate to budget items even more difficult.
The technology for handling billing may allow for a better approach.
If a firm were to match its billing entries with the budgeted items, it could generate a billing statement that both identifies the budgeted items and tracks time worked as against those items. The key to this would be having a time entry linked to the budget item when entered—not after the fact. That would allow accurate allocation of hours worked to the budget.
For example, consider a billing statement that includes—after its time entries—the following chart of budget items versus time billed:
The above chart provides an at-a-glance picture of the state of the case. Add a column for percentage of the task that is complete—noting that it comes somewhat as a guess—and the in-house lawyer managing the case has the ability to assess early and often how well the work is progressing.
In-house litigation management software might integrate with firm billing software to allow across-matter tracking and comparison. It would also allow lawyers working on a case to better stay ahead of potential problems with predicted budgeted items.
We wrote our own billing software and have designed the possibility of doing this into our software. I am not aware of all systems in use, but I have never heard of one that does precisely this. Software vendors could incorporate this type of feature, if enough companies ask for it.