Guest blog by: Frederick Paulmann, CEO of The Counsel Management Group
The year is more than one-third complete. The good news is that there is much to enjoy with warmer weather, more sunlight, and longer days upon us. The bad news—for many of us—is that some of our matters are beginning to go off track, with larger expenditures, uncertain forecasts, and potential pitfalls we’ll have to (somehow) explain later in the year. Strangely enough, we’re fortunate to see evidence of this now, while there is still time to correct it. The more vexing problems come when the bad news does not surface until later in the year, when it’s too late. There are, however, some simple things you can take to nip these problems in the bud.
1) Prioritize your efforts. Time is increasingly scarce in our busy world. While it would be nice to be able to devote full attention to every matter in the portfolio, reality dictates otherwise. So, instead, prioritize your efforts to focus more intently on the matters that consume the lion’s share of dollars and/or strategic attention within your group. For these, craft stronger processes throughout the year for: spend analysis, detailed forecast updates, and budget meetings with law firms. For the other, less pressing matters, implement a quicker “as needed” approach to make sure things are on track in the aggregate, for the “bucket” of matters. Then address individual issues as they arise. But otherwise, if the overall bucket is on track, focus your energy elsewhere.
2) Forecast more effectively. The best approaches we have seen feature an early warning system to identify significant threats to budget. This means tracking not just dollars, but scope assumptions. Is matter activity progressing as anticipated? If so, there should be no significant change in spending—and accountability here is key. But to get to this level of management, you have to track scope assumptions soundly up front. And here’s a tip: if you don’t have a standard budget form tracking scope details—think spreadsheets, not paragraphs of prose—then there is a good chance you are not yet there.
3) Introduce a key concept—forecasts can be adjusted down. By tracking scope assumptions and the related dollar impact, you are in a better position to reduce a forecast where the pace or complexity of the matter has diminished. This is a critical feature that distinguishes first-rate approaches to managing legal spending. Too often, under the old-school approach to “managing budgets,” adjustments overwhelmingly went in one direction—up. Now, with better data and processes, clients are flagging some matters earlier in the year for reductions to cover unanticipated overages in other matters. This is wise portfolio management, and increases overall cost predictability and credibility in the eyes of Finance, Business Unit Heads, and other leaders.
4) Dive more deeply into certain invoices. Yes, standard monthly invoice review is helpful. But in-house lawyers and claims managers are constantly pressed for time as their dockets grow to cover more work. Increasingly, companies are turning to powerful analytics tools and processes to examine a thick batch of invoice data for efficiency patterns and practices not discernible via in-house lawyer or claims manager review each month. Performing this deep dive periodically provides extremely valuable feedback to share with the firm to curb inefficient practices while there is still time left in the budget year.
5) Craft a mid-year scorecard. Take the feedback from the invoice deep dive and match it up with a quick internal survey of law firm responsiveness, efficiency, and whatever other performance measures are important to your team. Then share this feedback with the firms, expressing appreciation for the things done well, and asking for greater focus on the areas of opportunity. In our experience, the firms generally welcome this feedback and are glad to have the discussion.
That’s it—5 quick things to help in avoiding pitfalls as the year progresses, so you can hopefully enjoy the nice weather with a few less worries.