That Dirty Six-Letter Word: Budget
"Budgets" undoubtedly was not a class at your law school, but it is, nonetheless, an important subject to learn.
Reasons for Budgets
Lawyers do not like budgets. Creating them can be difficult as it is hard to know exactly how much time any particular task will take in corporate matters. Unfortunately, clients are used to budgets. Most of them must operate within one every year. They are used to deciding upon a course of action based on the budget for that particular project. Clients assume that legal matters will fit into the same neat little box as the yearly advertising allotment or the annual revenue projections. Those involved in construction, for example, do not understand how it is possible to build a complex high-rise structure, with many different trades, in accord with a budget but not be able to project and estimate legal costs for a single matter.
Create a Budget
Once you and your firm have decided to accept the client's case and you have approved the client through your firm's credit and conflicts checks, you will need to review the notes from your initial interview with the client. From this information, you can determine what sort of documents you will need the client to provide for the case. At this time, you can also think about how the case is likely to proceed.
This will then facilitate creating a budget of how much time you think the case will take. Be sure to include your time in court, time to strategize, and time to research. That is just your time. Now figure out how much time you will need from your assistant, your associates, and your paralegals. And do not forget experts, consultants, and out-of-pocket costs. If it helps you, consider two budget scenarios: the best-case scenario in which everything goes exactly as you wish and the worse-case scenario in which everything that can go wrong does.
Now do the math. How much will your time cost in the best scenario? How much in the worst scenario? Figure out the cost of your staff for both scenarios. Will you need to create presentations for court? Will you need to use technology in court? Will you need hundreds of copies? Add these costs in and any other items that you can think of that will apply.
Educate the Client
Now comes the hard part. You have to explain your plan and budgets to the client.
Tell the client exactly what you expect to happen and explain your two budget scenarios. Do not paint a rosy picture or shield the client. Most clients are business savvy enough to know that you cannot predict the future. They do not expect you to. All they want is some idea of the options, probable outcomes, and corresponding costs involved. They are used to making educated guesses about the future of their businesses, and they expect you to be able to make educated guesses about their matter and your business.
The issues of time and money will matter greatly to clients. That is why you have created two scenarios. Obviously, the actual cost of the matter will be somewhere in between the best scenario and the worst one. The important point is to walk your client through each scenario. By doing this, you are, in effect, telling the client what to expect each step of the way. Getting buy-in from the client helps both you and the client.
Agreement from Clients
Now you need to get the client to agree to both your course of action and your budget. The simplest way to do this is to ask the client to sign at the bottom of your budgets and initial the key paragraphs. Getting the client involved is imperative.
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