Zero-based budgeting processes as a tool for law departments

Most law department managers, asked to submit a budget for the coming year, start from the previous year’s budget and tack on a percentage increase (See my posts of Oct. 20, 2005 on budgets cascaded down to practice groups; and Nov. 25, 2005 on top-down vs. bottoms-up budgets.).

A more difficult yet more disciplined method is zero-based budgeting. An example of such a budget in a law department comes from Rees Morrison, Law Department Administrators: Lessons from Leaders (Hildebrandt Inst. 2004) at 44. The law department cited there tries each year to look afresh at each budget category, as if its managers did not have any history for any category of spending. If managers do this, with fairness and resolve, they will question assumptions and create a reality-based budget.

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