Ron Pol raises an interesting point in in-box of the ACC Docket at 14. He draws on J.H. Hope and J.R.T. Fraser, Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap (Harvard Bus. School Press 2003). Those authors cite studies www.bbrt.org indicating that up to 90 percent of managers think the traditional budgeting process takes too long and adds little value. They have also found that traditional budgeting doesn’t focus enough on strategic issues and can even cause dysfunctional or unethical behavior.
Law department managers probably feel the same way (See my post of Jan. 25, 2006 on demands for budgets months before a fiscal year begins.).
A more useful exercise is to do away with the rigid annual budget and replace it with three- or four-month rolling budgets. Update the budget as events happen and pay attention to trend lines.