A Better Way to Use Historical Matters as the Basis for New Plans and Estimates
Prior matters can provide good background information as the basis on which to develop fee estimates/timelines for new matters, but only if the matters are truly comparable with respect to the nature of the legal work performed. What’s the key to “comparison shopping” historical matters when planning for a new matter? We believe the key is to know the context of the underlying matters, rather than just the billing history.
4 Steps to Mining for Historical Matters
Step 1: Identify meaningful matters based on scope and client outcome.
Notice we did not say profitability (that’s Step 4). First and foremost are the matters comparable to the legal work at hand? If so, how did the prior matter wrap up? Was the client happy with the result? Did the matter end earlier than planned for some reason?
How do you sift through historical scope and outcome? That’s where Planning Blox can help. We can capture detailed scoping data and matter outcomes unique to any types of matters using our configurable forms technology. Whether this data is entered directly into Planning Blox or integrated from other solutions such as case management systems is entirely up to you. Either way, you will be empowered with the context of matters coupled with the billing data for the matters to properly comparison shop.
Step 2: Note any Scoping Adjustments Needed.
If you found matters close to the scope of the new matter (with a happy outcome), what other adjustments may be necessary with the new matter? It is not common to find the perfect historical matter. Adjust for anticipated quantities of items, such as number of depositions, interviews, etc., and for any anticipated duration differences. Isolate the prior matter’s portion of work attributable to the underlying scope items wherever different, and adjust as appropriate. The new matter’s scope is recorded in the same scoping forms, and can be generated as highly formatted output for the client budget background information.
Now that you have a good handle on whether matters are truly comparable to the legal issue at hand, you can look at the underlying financial data in more detail.
Step 3: Were the Prior Matters Staffed Appropriately?
Was leverage in line with firm goals? Given the comparable scope for the prior matters, don’t throw away these matters just because they were under-leveraged. Do, however, make smart adjustments accounting for experience of the proposed staff (e.g., you may need to increase hours a bit if leveraging down the Associate chain).
Step 4: Was it Profitable? Were there any Billing Issues?
While it’s good to use historical matters to estimate the level of effort required to complete the matter, a quick look at the internal financial outcome of the matter is helpful. Of course you will be pricing the new matter based on current rates, pricing arrangements, etc., which may eliminate any prior matter profitability concerns, but this is a good chance to check for any significant hourly write-downs to validate the prior matters as good basis comparisons.
While it’s great to have billing analytical tools to help compare matters, a true apple-to-apple comparison is only possible if the non-financial scope is known. Planning Blox can help, right out of the box, with standard integrations and easily created scoping forms.