Legal Budgeting 101 (part 2): The Problem with Excel
I read a lot of articles on legal budgeting before launching Digitory Legal, but one in particular really stuck with me. It is an excellent reference entitled “Best Practices in Budgeting for Patent Litigation” that was published by the American Bar Association in 2009 [FN 1]. The article was memorable because it describes in graphic detail the painful, time-consuming process inside and outside counsel must go through to properly manage legal budgets with Excel spreadsheets (that’s my take; the authors did not characterize it that way). Although this article was written seven years ago, based on my research it still represents the state of the art in legal budgeting.
Below is a brief discussion of my key take-aways from this article and some thoughts on why the legal industry really needs to do better than Excel (approx. 30 seconds to read).
What It Takes To Do it Right.
Here are a few reasons this article made me more determined than ever to build a modern legal budgeting platform:
- The authors were not aware of many off-the-shelf budgeting products for law and viewed Excel as the best available tool.
- You need to use 3 to 5 different spreadsheets and update them constantly to effectively manage a litigation budget.
- Creating and populating these spreadsheets is time-consuming and the numbers you input initially will be wrong.
- It takes several iterations to get the various spreadsheets to balance out.
- Breaking out tasks and assigning hours on a person-by-person basis adds an extra spreadsheet but improves accuracy (Totally agree about the accuracy, and Digitory Legal’s system includes these elements without the extra complexity).
- Lawyers are terrible at — and generally dread — this stuff, so you need to involve a non-lawyer accounting/finance person to help update spreadsheets each month.
Take a moment to think about the amount of time involved in managing all this. In a $400 billion industry where time is money and lawyers spend 2-4 hours a day on non-billable tasks, automating any element of the process could have a huge financial impact.
Who’s Afraid of the Big Bad Spreadsheet? (Hint: they have a law degree)
Excel is the opposite of user-friendly. I graduated magna cum laude from law school and have 17 years of practice under my belt, but the process described in this article made my head spin. If this is what you have to do to get budgeting right with Excel, no wonder our industry is so bad at it.
Don’t get me wrong, I know that Excel is a very powerful tool if you know how to use it. But that’s a very big “if” because most lawyers really don’t. In fact, the Internet is littered with articles describing lawyers’ ineptitude with basic office technology like Excel.
As bad as lawyers are at using Excel now, the problem is only going to get worse in the future. Time Magazine recently reported that Millennials in the workforce have no experience with Excel, and the summer associates your firm hires in five years will never have called a cab let alone worked with spreadsheets. If you want a junior person to take the first cut at that budget without wasting countless hours of time (and you do), you need a better tool.
A Better Way Has Arrived.
What if you had an affordable, user-friendly budgeting application with the speed and adaptability of Uber and Dropbox? A collaborative platform that automates many of these processes, can be updated easily, and allows clients to compare apples-to-apples. Digitory Legal has built this tool.
Catherine Krow is the founder and CEO of Digitory Legal. She is an experienced general litigator and trial lawyer and was a Partner in the San Francisco office of Orrick, Herrington & Sutcliffe from 2007-2014.