The top three demands from chief legal officers, according to a 2013 survey by Altman Weil, are “more efficient project management,” “improved budget forecasting,” and “greater cost reduction” — all of which can be controlled by budgeting and project management. General counsel are under more pressure than ever from management to “sell” their budgets, and every budget is being cut in the current economic climate; thus, they have become savvy about strategy, costs, and managing their litigation and outside counsel like any business project.
Yet, if pressure from clients and costs is not enough, perhaps court intervention will motivate law firms. In the United Kingdom, through the Jackson reforms implemented in April 2013, courts intervened in the budgeting process by requiring counsel to submit budgets for approval. The Jackson reforms should encourage law firms in the U.S. to manage and budget more effectively before it becomes a government priority.
Risk analysis is a powerful tool that also can be used to increase the efficiency of business litigation. Theoretically, businesses should be able to calculate the point at which it makes economic sense to settle rather than litigate. In analyzing such risk, counsel and the client should analyze the probability of liability, the range of damages and the fees necessary for the desired result. Because no perfect risk assessment model exists, counsel should consider employing a combination of tools, including statistics, intuitive judgment based on experience, and quantitative analysis using decision-tree or simulation-modeling techniques.
Part 2: Managing the budget