First, outside counsel's understanding of the particulars of a specific matter has genuine predictive value. That value is better realized in selecting among evidence-based budget scenarios than in conjuring budget scenarios from thin air. Where outside counsel's experience should come into play is not in substituting speculation for an empirically grounded range of outcomes, but, rather, in predicting where within the distribution a specific matter may fall, making explicit the assumptions underlying those predictions, and pinpointing the key variables.
Second, outside counsel's budget should be of use when it comes time to review the bill. A budget should guide a discussion about reasonable costs, unanticipated exigencies, and value delivered. But a budget cannot serve that purpose if both sides treat it as a work of implausible fiction.
Third, reasonably accurate budget estimates are useful in considering alternatives. They are useful in comparing prospective firms to an incumbent. They are useful in selecting among firms bidding on a new project. They are useful in weighing and structuring alternative fee arrangements. Etc.
Fourth, if you do not measure it, you can not improve it. That aphorism, a paraphrase of Lord Kelvin, is a confederate of Parkinson's law: work expands so as to fill the time available for its completion. Though lawyers operate in a world of inflexible deadlines, many do not face strict time constraints sleep can always be bartered for additional billable hours. There is nobility in an ethos of getting everything done right and on time no matter what (i.e., how long) it takes. But that mindset too often leads to a reliance on brute force and a valorization of poor time management. How many associates have been heard to brag about all-nighters and weekends sacrificed to labor-intensive busywork?
Fifth, the more extraordinary the matter, the more valuable an accurate budget becomes. Extraordinary might be a function of size. But extraordinary can also be a function of familiarity. In-house counsel has reams of data on the matters they consistently encounter. The data, and attendant comfort, disappear when the matter is outside their norm. In such instances, in-house counsel has few choices but to rely on their outside lawyers' past experience to produce reasonably accurate budget estimates.
Finally, the ability to supply reasonably accurate budget estimates based on empirical analysis of past matters is evidence of a firm's overall approach. Reasonably accurate budget estimates are, of course, something that clients want and need. Giving clients something non-billable that they want and need, signals a firm's commitment to customer service. Likewise, a penchant for empirical analysis is a departure from the tradition-bound, ossified law firms that so many lawyers (including this one) imagine as one enemy of progress in our profession.
D. Casey Flaherty is corporate counsel at Kia Motors America Inc. The opinions expressed herein are his own.