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Tension between quarterly or semi-annual budgets and the requirement of Finance for an annual budget

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Realistic in-house counsel accept that the accuracy of a law firm’s budget declines precipitously the farther out it goes (See my post of Aug. 4, 2009: use a funnel metaphor for budgets; Oct. 22, 2008: build for flexibility rather than strive for prediction; July 9, 2009: obtain budget scenarios instead of single figures; and Nov. 3, 2009: twists and turns when you test the accuracy of law firm budgets.).

A budget re-submission for major matters each quarter makes sense (See my post of April 27, 2005: Cummins and budget no farther than your headlights; March 4, 2008: budget out about a quarter at Time Warner Cable; Jan. 21, 2009: JDS Uniphase and its quarterly updates; March 29, 2009: review budgets every three months; May 6, 2009: meaning of “budget” vs. “forecast”; Aug. 11, 2009: McKinsey recommends quarterly budgets; May 11, 2011: thoughts on budget time frames; and June 2, 2011: e-Bay’s practice.).

The CFO, unfortunately, may still insist on a place-holder figure for the annual budget. This tension between pragmatic usefulness and these-are-the-rules guesstimates will never be resolved.