Why Annual Financial Budgeting Isn't Enough Anymore: The How, What, and When of Legal Forecasting
Dynamic forecasting can help GCs better address spend in real-time.
May 9, 2022
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What Will I Learn?
The key distinction between budgeting and legal forecasting, and its importance for legal departments.
How financial planning can address common legal department challenges, such as talent retention and rising costs.
How agility-based financial modeling enhances performance and provides flexibility in managing legal spend, with a three-step approach for implementation.
Forecasting is a critical component of legal department management.
The COVID-19 and macroeconomic pressures GCs have been dealing with over the past couple of years are still very much present, but they’re being further complicated by record inflation and talent recruitment challenges of the Great Resignation.
In thefirst iterationof Axiom’s in-house legal budgeting report, we argued that GCs could effectively use the year-end budget-building process to fundamentally re-examine where and how they spend their budgets in order to navigate uncertainty and derive increased value from their legal spend.
The Need for Legal Forecasting
Now that budgeting season is behind us, it’s time we turn our attention to legal forecasting and agility-based financial modeling.
Legal forecasting can:
Help GCs understand their current pain points – which may be quite different than those assumed when finalizing their budget.
Help in-house leaders hedge against the attorney hiring and retention issues that are a byproduct of an acute war for talent in the legal industry.
Make pivoting possible. It makes in-the-moment spend redirection, enhanced risk mitigation, better matter mapping, and informed attorney hiring not only possible but probable.
Many department leaders find the budgeting process so laborious and time-consuming, they’re reluctant to spend more resources on quarterly forecasting. Or worse, departments create such detailed, granular budgets, they don’t deem forecasting necessary.But forecasting is necessary, and it doesn’t have to be overwhelming.
In this whitepaper, we arm legal department leaders with a three-step forecasting playbook so they can implement agility-based modeling and course-correct to better address spend in real time.
