For some of our clients, flat fees or litigation budgets are a better billing structure than the hourly fee. We offer detailed litigation budgets to clients to show how our time is spent while working on your case.
Management of costs and presentation of project status are significantly improved when a litigation plan and accompanying budget are developed. A litigation budget is not a "cap," nor is it a guarantee that fees will never exceed a certain amount. However, the ability to give a straightforward presentation of a case in the form of an estimate will assist all parties and enable better control of the costs associated with litigation. For this reason, litigation budgets are a helpful way to manage litigation costs while preparing for any unexpected developments. Below are the advantages to preparing and maintaining a litigation plan and budget and a brief summary of how a budget is prepared.
There are several advantages to preparing a litigation budget. Some advantages include:
Before a litigation plan and budget is created, counsel must establish and develop a working understanding of the goals of the client. Keeping these goals in mind, a litigation plan and accompanying budget are prepared. Below are the steps involved in planning, preparing, and presenting a litigation budget:
A method called "task-based billing" allows outside counsel to stick to the litigation plan and budget. This type of billing allows management to understand the amount of time and effort involved in relation to the type of task performed. Most electronic billing systems allow for this type of budgeting and invoices.
One of the advantages to preparing a litigation plan and budget as listed above is the ability to provide progress updates at any stage of the litigation upon request. At each stage, the amount of hours spent on the matter as well as the budgeted cost remaining should always be available. Because of the availability of this information, status updates and reports to law departments by outside counsel are more informative and may be quickly forwarded to management. This process saves time and resources because all parties are timely informed of the case status. Additionally, any necessary approval for changes to the budget may be timely given.
There are several potential issues that may arise when litigation plans and budgets are used. Some of them include:
Unforeseen circumstances or actions by opposing counsel that affect the time spent in a particular area of litigation.
Actions taken that are not within outside counsel's control, including discovery methods and unanticipated motions by opposing counsel.
How much (or how little) work the judge requires the parties to a lawsuit to perform in a particular case.
Each matter requires a case plan that is specific to the facts and legal issues presented. Because issues may arise that were not apparent at the early stages of litigation, litigation plans and budgets occasionally need to be adjusted to reflect new information.
Matters may be sufficiently related to one another, which may require centralized discovery and research to be conducted. This will generally affect the litigation plan and budget in a positive way.
A well-prepared litigation budget serves two major purposes. First, litigation budgets help the client anticipate costs as accurately as possible, which gives both client and attorney a broad understanding of how the case will progress and the costs involved at each stage of litigation and, more importantly, at the end of the process. Second, litigation budgets help manage the case by providing a detailed plan of counsel's expectations at all phases of litigation. Using a litigation budget, one may easily compare case expectations and goals to the progress made in the case and can effectively manage the tasks that have yet to be completed.
In addition, litigation budgets keep counsel on track and accountable for all work performed. Using the methods above, an experienced attorney can effectively provide a "best estimate" of the cost of litigation and provide the client with a comprehensive look at the matter. If an attorney is willing to take the time and plan out a case from start to finish, chances are the end result of the litigation will be less expensive for the client and more efficient for the attorney. This process helps counsel and clients to make meaningful, well informed choices at every stage of the litigation.