Many attorneys are reluctant to develop budgets for legal matters out of fear that the client will use them as fee caps, refuse to pay for the budgeting process, or because there are too many uncertainties to make a budget, and so on. However, an increasing percentage of business clients are insisting on task-based budgets for legal services instead of accepting the more traditional hourly billings and lump sum invoices from their counsel.
A budget should include fee estimates for all legal personnel (attorneys, paralegals and support staff) who will be working on the matter as well as all anticipated expenses (reproduction, document imaging, and travel expenses including transportation, lodging, meals, etc). Fees and expenses for any outside local counsel, vendors, consultants, and experts should also be included. Finally, a good budget may include cost ranges for contingencies, and clearly defined assumptions on which the budget is based to account for unanticipated changes and outcomes in the work performed.
A budget for any legal matter can be easily set up and managed using readily available spreadsheet software such as Microsoft Excel® or an electronic billing system which incorporates a budgeting feature. The advantage of using spreadsheet software over an electronic billing system is the greater degree of flexibility in designing a budget template in a spreadsheet format. One that meets the needs of a particular client and a specific legal matter, while still retaining the ability to make changes and update the budget quickly and easily.
Setting up a budget can be greatly facilitated by using a set of uniform billing or task codes such as the Uniform Task-Based Management System (UTBMS) code sets developed by the American Bar Association and the American Corporate Counsel Association (ABA/ACCA). If these code sets are used consistently throughout the plan, schedule and budget, then budget tracking and reconciliation with bills can be accomplished more efficiently.