Budget Season

by An Trotter

A few weeks ago, I participated in a terrific CLOC NY Area Huddle, "Budgeting for Legal Ops Professionals." Organized by Chapter Leads Stacy Lettie and Jennifer Phillips, the conversation was robust and included great insights from a number of CLOC folks including Bryan Kimes, Marc Burdman, and Jack Thompson.

We talked about how to structure our budget, the importance of building a strong relationship with your Financial Planning & Analysis (FP&A) team, strategies for (maintaining of getting to) a clean data set in your matter management and ebilling system - centralized intake, weekly new matter reports and an analyst looking for data issues when the monthly reports are run, reserves and contingencies, and rates benchmarks.

  • Are you in budget fire drills weekly?
  • Having difficult conversations with finance or business leads about why legal is "over-budget"?

Ops in a Box, Legal Edition excels in the Finance area with the following resources:

  • Alternative Fee Arrangement (AFA) Types
  • Budget, Reconciliation and Reclass Template
  • Guide to Month-end Reconciliation and Budget Estimate Update Processes
  • Matter Budgets Best Practices Deck
  • Matter Budget Template
  • Matter Budget Reports Template

The kit also includes Dashboard & Metrics guidance, a Legal Billing Policy and Rate Submission or Review Guidelines.

For your budget tracker I recommend your Excel follows the top-line outline provided by your FP&A team. In most cases this is going to typically look like: People (Salary & benefits), External Legal Services Providers, Travel and Office Operations (aka everything else). Below these headers you will want to itemize spend in most cases by vendor with line items grouped in most cases by vendor (and in the case of legal matters grouped by practice area). As Mark Burdman noted, grouping legal matter spend by practice area aid conversation with the CEO, CLO and CFO regarding your spend story and holds practice area leads accountable.

Throughout a consistent thread was the importance of building your relationship with finance. Adam Becker and Stacy spoke to the importance of regular meetings with your finance team (monthly or quarterly). Align the reports in your legal billing system with the back end system and give your finance folks secure access to their business' legal matter data to entirely eliminate the angst of reconciling the two data sets. Educate your finance team with stories to help them understand what the numbers mean for the business. They want you to reduce your trademarks spend? Walk them through their options in where your trusted intellectual property would enter the public domain or the unfettered counterfeits that would result. Have a key litigation for which the prognosis is uncertain? Make sure they understand the lifecycle of a litigation and when different scenarios would kick in. 

Why do I love this topic? Because it presents one of the most meaningful ways legal ops can make a difference. For more information, please also see posts:

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