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Law department budgets from the top down or the bottom up

Finance departments sometimes tell law departments their aggregate budget for the coming year, which is “top-down budgeting.” Other law departments figure out their spend for the coming year and tell finance, a reverse practice referred to as “bottom-up budgeting.”

Most common might be “golden-spike budgets,” where law and finance come together, as did the east- and west-bound tracks of the first transcontinental railroad. “Golden” conjures up the dollars involved; “spike” connotes the stake in the ground that the budget represents where it is jointly agreed to. (For more on law department budgets, see my posts of July 16, 2005 on GCs and their business acumen, Sept. 27, 2005 on variance in outside counsel expenses, and Oct. 20, 2005 on delegating down budget responsibility.)