Better Budgeting Analysis, Better Predictability
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Want more? See the webinar on-demand: http://llm.liquidlitigation.com/2016-03-Budget-Webinar.html As inside and outside counsel continue to be asked to do more with less, the need to master budgets increases. In this presentation, you'll learn how to create, plan and optimize budgets that allow for better predictability and alignment of goals.
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Better Budgeting Analysis, Better Predictability
- 1. Better Budgeting Analysis, Better Predictability March 31st, 2016 #BetterLegalBudgets
- 2. LLMinc.com Introductions Vince Cordo Global Sourcing Officer Paul Meyer Managing Counsel E-Discovery Lindsay Stevens VP of Technology lstevens@llminc.com #BetterLegalBudgets
- 3. LLMinc.com Agenda • Role of the Corporate Counsel • Why Budgets Matter • Budget Basics • Knowing the Numbers • Reporting – Per Matter • Outside Counsel Collaboration • Reporting – Big Picture • Benchmarking, Analysis, Taking Action • Q&A #BetterLegalBudgets
- 4. LLMinc.com Corporate Counsel Role and Goals We’ll see a continuation of the trend toward general counsels who report directly to chief executives and function as high-level advisers to CEOs and their boards. To manage outside law firms, general counsels will have to develop new strengths in strategic and business knowledge, financial skills, and collaboration. They will also need the agility to explore alternative fee models while maintaining the quality of legal services provided - Harvard Business Review – The New Path to the C-Suite – 03-2011 • Working with IT • Compliance • HR • Security • Practice Law • Manage and lead a team of legal professionals • Manage outside teams (counsel, vendors) • Manage a department including budgeting • Advising and reporting to the C-Suite and Board #BetterLegalBudgets
- 5. LLMinc.com Why Budgets Matter – The Big Picture • You are not a revenue source… • …but you must show value and ROI • Your company is asking you to… • …reduce cost • …do more for less • …establish metrics to measure success • Risk Management and Informed Decisions • Predictability • Guard against company risk (exposure) • Identifying inefficient / risk-filled business practices • Internal vs External resource usage #BetterLegalBudgets
- 6. LLMinc.com Why Budgets Matter – Individual Matters • Litigation work is reactive / responsive to events • Avoid surprises within an individual matter • Be in position to control the current matter • Inform decisions during the matter and in valuing the settlement • Predict cost of future comparable matters #BetterLegalBudgets
- 7. LLMinc.com Budget Basics • Identify expectations and scope proportional to task or matter • Plan budget – anticipated cost and time of matter • Communicate plan and expectations to matter team both inside and outside counsel • Track spend – consistently and accurately • Use technology #BetterLegalBudgets
- 8. LLMinc.com Knowing the Numbers • Establish metrics to measure success • What numbers are you tracking? • Duration / Life cycle of matter • Actuals or spend for matter • The Granularity Question – How low do you go? • Task Level = e-billing • Track at a higher level • Firm, Vendor and Inside spend • Cost Drivers / Big Bucket Tasks #BetterLegalBudgets
- 10. LLMinc.com Outside Counsel Collaboration • Work with outside counsel to provide updates to budget and status • Create a single point of shared information • Coordinate deadlines and decision points • Review spend regularly • Discuss unexpected costs • Technology! – Alerts for approaching budget thresholds #BetterLegalBudgets
- 11. LLMinc.com Actuals v Budget - Forecasting #BetterLegalBudgets
- 12. LLMinc.com Avoid Surprises, Gain Control • Forecasting – based on current matter spend what will happen 2 months from now? • Avoid surprises • Proactive and transparent discussion • Address inefficiencies • Set expectations and align goals #BetterLegalBudgets
- 13. LLMinc.com Reporting – Big Picture • Spend v Budget by category • By Matter • By Matter Type • By Firm • By Fee Arrangement • By Cost Driver • Outside vs Inside spend • Litigation exposure by matter • Metrics and trend analysis for: • Diversity • Jurisdiction • Judge • Win / Loss • Expenses #BetterLegalBudgets
- 14. LLMinc.com Actuals v Budget (By Cost Driver) #BetterLegalBudgets
- 15. LLMinc.com Comparison and Gaining Insight • Questions to ask • Are rates appropriate? • Are budgets regularly over or under estimated? • What if these trends continue? • Are you getting good ‘value’? • Where can we optimize and implement efficiencies? • More data = better predictability and insight • Have a way to compare current metrics to base level • Exm: Set benchmarks for rates, duration, spend for firm, matter type, AFA, etc. • Exm: Use shadow billing to evaluate success of AFA arrangements • Use current spend to forecast against the budget • Use data and trends to predict budgets for new matters #BetterLegalBudgets
- 16. LLMinc.com Analysis and Positioning When asked how serious CLOs think law firms are about changing their service delivery model to provide greater value to clients the result is a median 3 out of 10 - Altman Weil CLO Survey 2014 • Use knowledge to gain leverage over and incentivize outside counsel • Take control of the process • RFPs, Bids • Negotiate billing policies and guidelines • Don’t be afraid to move work • Use niche firms for specialized work and lower prices • Simply reduce the number of firms you work with to gain more leverage #BetterLegalBudgets
- 17. LLMinc.com Analysis and Positioning • Alternative Fee Arrangements – AFAs • Monthly / Yearly / Project / Portfolio fixed fees • Caps, Not-to-exceeds • Success fees • Use reports to compare and validate AFAs • Shadow Billing • Take action on rates • Reduce hourly rates • Gain volume discounts • Where tasks are fixed can you commoditize work? #BetterLegalBudgets
- 18. LLMinc.com Showing Value • Evaluate Firms’ performance – rate, value added, outcomes, etc. • Streamline and evaluate outside relationships to get best ROI • Evaluate whether inside vs outside counsel should be used • Be smarter about how and when engage • Be aware of internal head count and importance of growth • Generate reports for C-Suite to show efforts and tie in to the business plan • Spend vs budget for department • Cost savings due to process changes • Costs avoided due to legal department decisions #BetterLegalBudgets
- 19. LLMinc.com Conclusion • Legal is not a stand alone entity • Aligned goals and shared success between… • Inside counsel and outside counsel • Inside counsel and internal clients • Corporate legal and C-Suite / Board • Track spend against the budget to give you knowledge at your fingertips #BetterLegalBudgets
- 20. LLMinc.com Q&A