June 12, 2008 |
Posted By Patrick J. Lamb |
0 Comments |
Budgeting For Litigation: No Excuses
The excuses are as numerous as they are legendary:
"I didn't know the other side was actually going to take depositions."
"Who knew the court would actually want a brief on the summary judgment motion?"
"We've got no chance of winning the motion but it will help us 'educate' the judge."
Everybody has their favorites and you should feel free to post them in your comments. At this stage of the budget issue, we know that (1) virtually every client has to prepare budgets; (2)most lawyers hate to prepare budgets on litigation; (3) the uncertainty of litigation is so profound that no one can control what it costs to litigate a case; and (4) it was always the other side's fault that we went over budget.
What's a General Counsel to do? Resort back to lawyering 101--define terms and make your "adversary' (read, your outside lawyer) be precise. Start with the definition of budget. When your lawyer says he doesn't know what it will cost to do something, he really means he doesn't know how many hours his team will spend on this issue. Cost is not part of that consideration. When she says litigation can't be predicted, she only means that she can't foresee the unusual or the unknowable.
Let's start with a definition of budget--it is nothing more than an agreed limit on the amount your outside counsel will charge you to represent you in a lawsuit. Uncertainties about what might happen? Create a scope of work. You know pretty early on how many key witnesses there will be to depose. If your off by one or two, that's hardly material. If issues change and the number is suddenly materially higher, both sides should be able to refer to a scope of work agreement and reach the same conclusion: a change order is necessary. Or at least the client should be informed of the risk she takes if she decides not to authorize the additional depositions. The important point of a budget is that it puts the inside lawyer in a position to approve the expenditure of money before outside lawyers spend it or spend the hours.
So its pretty simple. Budgets are tools to put the inside lawyer in a position to know and approve how much will be spent in pursuit of a lawsuit, and deviations from that approved sum must be approved before any new work occurs.
A note to outside lawyers--if you think budgets are tough, think about fixing your fees. We know from just a few months of experience that if you put your mind to it, there are lots of ways to skinny the cost without reducing effectiveness. It's all a matter of focus.
"I didn't know the other side was actually going to take depositions."
"Who knew the court would actually want a brief on the summary judgment motion?"
"We've got no chance of winning the motion but it will help us 'educate' the judge."
Everybody has their favorites and you should feel free to post them in your comments. At this stage of the budget issue, we know that (1) virtually every client has to prepare budgets; (2)most lawyers hate to prepare budgets on litigation; (3) the uncertainty of litigation is so profound that no one can control what it costs to litigate a case; and (4) it was always the other side's fault that we went over budget.
What's a General Counsel to do? Resort back to lawyering 101--define terms and make your "adversary' (read, your outside lawyer) be precise. Start with the definition of budget. When your lawyer says he doesn't know what it will cost to do something, he really means he doesn't know how many hours his team will spend on this issue. Cost is not part of that consideration. When she says litigation can't be predicted, she only means that she can't foresee the unusual or the unknowable.
Let's start with a definition of budget--it is nothing more than an agreed limit on the amount your outside counsel will charge you to represent you in a lawsuit. Uncertainties about what might happen? Create a scope of work. You know pretty early on how many key witnesses there will be to depose. If your off by one or two, that's hardly material. If issues change and the number is suddenly materially higher, both sides should be able to refer to a scope of work agreement and reach the same conclusion: a change order is necessary. Or at least the client should be informed of the risk she takes if she decides not to authorize the additional depositions. The important point of a budget is that it puts the inside lawyer in a position to approve the expenditure of money before outside lawyers spend it or spend the hours.
So its pretty simple. Budgets are tools to put the inside lawyer in a position to know and approve how much will be spent in pursuit of a lawsuit, and deviations from that approved sum must be approved before any new work occurs.
A note to outside lawyers--if you think budgets are tough, think about fixing your fees. We know from just a few months of experience that if you put your mind to it, there are lots of ways to skinny the cost without reducing effectiveness. It's all a matter of focus.
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