Applying the Internal Discipline of Budgeting to Client Service
The Summer 2003 issue of Law Firm Inc., a new American Lawyer Media magazine about the business of law firms and targeted at senior managers of law firms, carries an article titled When Culture Clashes with the Bottom Line. It describes the benefits of budgeting techniques in law firm management. The article is in a roundtable format and quotes several senior law firm managers on the virtue of budgets.
An interesting question is whether firms that have learned the value of budgeting apply these lessons to provide more effective client serve. One interviewee from a firm that experienced financial difficulties reports that budgeting is the “single most important thing we did to make the firm healthy again.” Their budgeting focused on planning, particularly controlling costs and forecasting revenues. Surely this same approach can easily be applied to any large client matter to help prevent the matter management from going awry.
Another interviewee stresses the importance of sharing data so that all partner and associates know how the firm is dong. Surely clients would like to know how their law firms are doing on a big matter.
Another reports on the issues of managing multiple offices and says that they use budgets to encourage consistency across offices. Surely law firms that handle multiple matters for the same client ought to strive to achieve consistency in how they manage those matters.
Another uses budgets to manage expectations internally. Surely clients have expectations that need managing.
And finally, one reports that budgets initially had been a reflection of how operations happened to occur and the firm had to shift to budgets as a tool to plan and drive the business rather than merely reflect what occurred. Surely matter managment would be more effective if there was a plan in place to drive toward particular results.
The technology to support budgets for client matters need not be complicated. Simple spreadsheets may suffice. Collecting data from the time and billing system and systematically analyzing it to understand performance is another step. A firm that was really serious about budgeting client matters could develop a Web-interface that collected planning inputs systematically from the firmâ€™s lawyers and then generated variance reports monthly. Of course, once a Web-interface is in place, sharing it with clients is a relatively easy step.
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