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The benefits of legal project management and advance budgeting

Careful advance planning and forward thinking is a major portion of the solution for major corporate deals and litigation

Previously, we discussed the ways in which major corporate deals and litigation, contrary to some people’s assumptions, are actually amenable to the techniques of legal project management (LPM) and to advance budgeting and planning. One key reason for this, of course, is the existence of a set of task and phase codes that can be applied by a law firm or a corporation to nearly any matter, no matter how complex. These can be based on the American Bar Association’s Uniform Task-Based Management System (UTBMS) codes, or they can be developed on a custom basis by a company along with its outside counsel. Once such a project is implemented, any firm can develop a reasonable data set for prospective budgeting purposes in 12 to 24 months.

In addition, as law firm consultant Pamela Woldow notes, careful advance planning and forward thinking is a major portion of the solution. Woldow quotes a law partner as saying that “anything that has ever happened before is foreseeable,” and that “increasingly, clients are holding us accountable for foreseeing the foreseeable.”

We don’t see a budget for a piece of litigation or a transactional matter as a static, precise document. Rather, a budget sets out the expectations that a law firm and its client must deal with. It sets forth the milestones and the deliverables that are necessary — in litigation, key points such as the filing of dispositive motions, the end of discovery, or the beginning of trial, or in transactional work, a letter of intent, a purchase agreement, or a closing.

While it may not always be possible to budget the entire life cycle of a matter at the outset, a budget can be constructed for major phases of the work within a reasonably narrow range — enough to permit a corporation to act on the basis of the assumptions in the budget document. The corporation will thus be able to plan ahead as far as is reasonably possible, and just as important, will be able to identify the risk events that can affect the scope of the work required, the human and other resources needed, and the time required to achieve the client’s goals while managing those risks and keeping in-house counsel fully informed.

With the appropriate level of persuasion by in-house counsel, law firm partners can apply the techniques of legal project management in any area, including litigation and transactional work. For example, at our firm we are increasingly using new software tools to provide real time budget-to-actual reports independent of billing. This allows in-house counsel to assure senior company managers that there is a process in place for actively managing legal spend before bills are rendered.

For particularly complex and fast-moving engagements where it is not possible to estimate all of the downstream events, the client may wish to consider an initial budget for assessment of the project, deferring for 60 days delivery of a detailed budget for the later phases of the litigation or transaction, and later provide revised budgets before beginning subsequent phases of the matter.

Whether the answer is careful planning, targeted brainstorming, methodical coding, intensive data mining, or a combination of the above, law firms and in-house departments are figuring out how to bring all matters, even the most complex, into the framework of legal project management to satisfy the corporate world’s need for predictability. In fact, legal project management is beginning to open up new vistas of co-operation between in-house lawyers and law firm attorneys and to show both sides that they have more in common than they would have suspected just a few years ago.

Contributing Author

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Samuel Goldblatt

Samuel Goldblatt is a Boston-based litigation partner at Nixon Peabody who represents domestic and foreign companies in a wide variety of cases, including commercial cases,...

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