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Track cumulative performance by external counsel against matter budgets

Periodically, inside and outside counsel need to revise the budget for a matter, and the law department should then revise its matter management system to show the new budget figure. Unless there is an audit trail or the revised budget does not over-write the original budget, it will be impossible for the law department to calculate the original or subsequent accuracy of the law firm’s budgets.

Another approach is to calculate the difference between actual spend and budgeted spend each time the budget changes. That cumulative figure could be stored and analyzed. The best law firms would have the least total discrepancy between their budgets and their actuals (See my meta-post on budget entries, Nov. 7, 2005.).

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One response to “Track cumulative performance by external counsel against matter budgets”

  1. Matthew Petrich says:

    Good morning Rees,
    One approach that we have taken is that when a matter budget is modified, the matter management system will keep track of unlimited matter budget modifications and with each change, the in-house attorney will write a quick comment that outlines the reason for the budget change. This information has proved to be very useful at year-end when law firm performance is measured in terms of cost control and overall result. Most matter management systems will need some slight “tweaking” to enable this type of functionality but we feel it is well worth the cost. There are other approches (you could even use Excel to track budget changes by matter) but as you stated, this process is critical to being able to determine if an organization’s budgeting process is providing any value.
    Thanks, Matt