Set requirements for matter budgets that vary according to the practice area

I advocate budgets for “major matters” handled by outside counsel. “Major” turns on the amount likely to be spent in some period of time. It doesn’t make sense to require all practice areas in a law department to comply with the same threshold requirement for matter budgets (See my post of Nov. 11, 2007: criticizes one-size-fits-all solutions.). If you do, some groups will do too many and some not enough.

For litigation, lawsuits might trigger budgets if the expected spend is more than $250,000 a year whereas for the environmental group perhaps $50,000 in expected spending elevates a matter to “major.”

My basic suggestion is to set thresholds for practice groups that recognize their different spending patterns. Probably not more than 10 percent of all matters should be budgeted but those matters should account for something close to 75 percent of the spending by the group (See my post of March 4, 2008: examples of thresholds; and Sept. 13, 2010: budget variance will vary by total cost of the matter.). Not that you can easily or always tell in the early stages whether a matter will balloon into a major matter, but you can develop some tests and guidelines.

We welcome comments

Your email address will not be published. Required fields are marked *