Budgeting and forecasting spend for legal matters is nothing new. But in the current environment of economic challenge, there is greater emphasis at many companies on corporate law department budgets. As a result of this increased scrutiny, legal departments are demanding ever more predictability and accuracy in budgets from their law firms. It has even become common for legal departments to scorecard outside counsel based on their ability to hit their budgetary targets. When forecasting spend on legal matters and setting budgets, the most powerful tool that a law firm or legal department can have is information. As an in-house attorney, you should gather and understand your own historical information, along with industry data that sheds even more light on similar work. And you should demand the same of your firms if you expect accuracy in their planning as well.
There was a time when law firms understood that they could think of budgets as approximations. They were targets, which could be moved or adjusted as cases wore on or circumstances changed. But with legal departments now expected to manage their budgets much like other organizations do, without exceeding preset levels, this is a luxury you can no longer afford to your firms. In today’s world, it is only possible to succeed when both in-house attorneys and outside counsel share the goals of predictability and certainty.