Page 6 - Litigation

S6 | MONDAY, APRIL 13, 2015 | Litigation
| NYLJ.COM
BY RICHARD A. DE PALMA AND WILLIAM T. GARCIA
The times they are a-changin’.
—Bob Dylan
Do not underestimate the power of a well-designed litigation budget to clarify thinking about a case and set client expectations about how it will be handled. A well-designed budget is more than a financial estimate; it sets priorities, reflects strategy and projects staffing. Increasingly, buyers of legal services expect well-designed budgets, and how firms create and use budgets is a factor in deciding which firms to hire.
Lawyers frequently hear from clients that they need help in controlling legal spend and that we need to better understand the pres- sure they feel to avoid unexpected costs. Surveys tell us that clients often do not see litigation as a cost-effective method of dis-
RICHARD A. DE PALMA is a partner in the business litigation practice of Thompson Hine in New York. WILLIAM T. GARCIA is the firm’s director of legal project management.
Proper Litigation Budgeting Delivers True Value to Clients
without having to ask. We expect supposed experts in the field to be able to estimate. It rings hollow for them to then claim that the project is too complex for the tradesman to even hazard a guess as to its path and likely cost. Clients have these expectations of us.
For our part, as lawyers who have to run our businesses at a profit, it also makes sense for us to have a work plan in place that gives us insight into upcoming levels and timing of revenue, staffing needs and deadlines. Using well-designed budgets throughout a practice helps us manage our business better so we can provide better client service.
The first step in systematically developing budgets is standardizing across several fronts: format of the budget, description of the work, identification of the tasks, etc. It takes time to craft well-thought-out standardized tools. It helps to start this process without the pres- sure of an impending deadline so that the templates are the product of careful reflection about long-term utility rather than reactions to the crisis of the moment.
Creating a template that is used for various types of litigation will reduce the time and effort necessary to generate the budget itself. A quick Internet search will reveal dozens of types of budgeting worksheets that can inspire
pute resolution. The uncertainty of ultimate cost may be driving clients to avoid litigation altogether or to settle cases earlier in the process than they might otherwise. Reducing that uncertainty provides clients a needed service, provides options and flexibility, and promotes better decision-making.
One common reaction to a call for budget- ing cites the axiom that litigation is fraught with uncertainty and the opportunity for mat- ters to careen wildly off the expected path. While this statement may often be true, it is not an excuse for not setting out a current understanding of a case’s likely path. A client engaged in product development faces the same uncertainty, but that client budgets for
the task, manages to the budget and deals with changed circumstances.
Others fear that a budget becomes a cap or a fixed price. Clear communication and a specific agreement with the client about the basis for the budget and the scope of the project at the time the budget is set resolves that issue. Clients run businesses too. They provide cost estimates for their work and they deal with changes to projections every day. Providing transparency about how a budget was derived makes the conversation about changed circumstances easier.
If we put on our consumer hats and think how we might react to a tradesman we employ, we realize that we expect a cost estimate