Budgets

About budgets

A budget can be an effective tool for managing and controlling spending.
The budgeting tools in Tracker are designed to simplify the following processes:
  • Receiving budgets from outside law firms
  • Managing the spending of outside law firms against those budgets
  • Preparing a budget for your legal department to provide to other business units and divisions
  • Preparing and reporting spending reforecasts throughout the year for your company

Budget basics

Law firm matter budgets and departmental budgets are the two organizational structures for budgets in Tracker.
  • Law firm matter budgets are automatically enabled and available to use immediately upon implementation.
  • The Departmental Budgets/Reforecasts module must be enabled by Thomson Reuters.
These options can be used individually or together.
The departmental budget is derived from the law firm matter budget or the company budget. Company budgets are always hidden from law firms. Each budget is created using a preset format, which is either a fiscal-year or phased format. The table below outlines the possible budgeting configurations in Tracker:
Budget basics
Budget configuration
Key budget characteristics
When to use this configuration
Law Firm Matter Budgets only
Budgets may be entered by law firm or company users.
Use this configuration when legal departments do not need to keep budgets hidden from law firms and do not want to have reforecasts taken to compare or report against later.
Departmental Budgets/Reforecasts derived from Law Firm Matter Budgets
Company user does not need to enter a separate budget. Departmental Budget figures automatically drawn from Law Firm Matter Budget.
Use this configuration when law firms provide accurate budgets, but you want to have reforecasts taken to compare or report against later.
Departmental Budgets/Reforecasts derived from Company Budgets
Company Budget must be entered by a company user. Departmental Budget derived from Company Budgets. Law Firm Matter Budget is different from Company and Departmental Budgets.
Use this configuration when the legal department wants to create a budget that is different from the Law Firm Matter Budget. The Company Budget is always hidden from law firms.

Law firm matter budgets

Law Firm Matter Budgets can be required in some or all matters. Law firm or company users submit the budgets that are then reviewed, approved, rejected, or edited by a designated budget reviewer. Companies specify what kind of budget should be submitted:
  • A phased budget for litigation or patents, which is divided into pre-set phases such as discovery, patent prosecution, etc.
  • A fiscal-year budget that is divided monthly, quarterly, or annually. To ensure that law firms submit required budgets on time, Tracker prevents firms from submitting invoices on a matter if the budget is overdue. The budget also must be updated at least once per year, prior to the beginning of the next fiscal year. Law Firm Matter Budgets are enabled automatically in Tracker, regardless of your database setup.

Departmental budgets and reforecasts

The Tracker Departmental Budgets/Reforecasts module lets companies create budgeting workflows to:
  • Save a departmental budget before the start of each fiscal year
  • Require one or more reforecasts each year. With departmental budgets, companies can compare spending to historical versions of the budget.
The source for the departmental budget can either be the law firm matter budget, or a company budget, which is created by a company user. A matter can have both a law firm matter budget and a company budget.
note
If a company budget is the source of the departmental budget, law firm users will not be able to see it.

Auditing

Companies can configure Tracker to alert the designated budget reviewer when an invoice exceeds the law firm matter budget amount. Company System Administrators configure this in Settings > Matter Type-Templates & Matter Setup. Depending on the configuration, designated budget reviewers receive alerts when approving an invoice would result in spending that exceeds the budget amount for quarter-to-date, fiscal year-to-date, cumulative-to-date, total for quarter, total for fiscal year, or total for matter. Most companies retain the default setting of fiscal year-to-date auditing.

Budget lifecycles

note
Budget, accrual, and status report due dates are all set in and controlled by calendars that can only be edited by a Tracker Coordinator.
Time Period
Departmental Budgets/Reforecasts Module NOT Activated
Departmental Budgets/Reforecasts Module Activated
Matter first created or law firm assigned to a matter for which budgets are required
By default, initial budget due in 0 days (Tracker affords a 10-day grace period). A Company System Administrator can edit the Matter Type (Template) to change when the initial budget is due.
Law firm users receive an Action Items alert and an email notification if their preferences allow them.
Designated budget reviewers are notified via email and an Action Items alert to review and approve Law Firm Matter Budgets.
If the Law Firm Matter Budget is the source of the Departmental Budget, the initial Law Firm Matter Budget is due in 0 days by default (Tracker affords a 10-day grace period). A Company System Administrator can edit the Matter Type (Template) to change when the initial budget is due.
Once the budget is created, designated budget reviewers receive an Action Items alert and email notification to review and approve initial budgets.
If the Company Budget is the source of the Departmental Budget, the initial Company Budget is due at the time of the next fiscal year's budget or reforecast, whichever is sooner. Designated budget reviewers will receive an email notification and—if updating is required—an Action Items alert, directing them to enter a Company Budget.
Throughout the fiscal year
Law firms submit invoices; Tracker audits invoices against the Law Firm Matter Budget.
Law firms submit invoices; Tracker audits invoices against the Law Firm Matter Budget.
Prior to Start of Next Fiscal Year
Next year's budget is due on the Firm Input start (the month is specified in Question 3 of the Budget and Accrual Setup). Only the Tracker Coordinator or backup can edit the Calendar of Events to change the Firm Input start. Law firm users receive an Action Items alert and email notification (if enabled) to enter a budget.
If budgets are overdue, Tracker holds invoices until the budget is submitted.
Designated budget reviewers are notified via email and an Action Items alert to review and approve Law Firm Matter Budgets.
If the Law Firm Matter Budget is the source of the Departmental Budget, next year's budget is due on the Firm Input start (the month is specified in Question 3 of the Budget and Accrual Setup).
If the Company Budget is the source of the Departmental Budget, the Company Budget is due on the Co. Input start (the month is designated in Question 3 of the Budget and Accrual Setup). Designated budget reviewers receive an Action Items alert and email to enter a budget.
If the Law Firm Matter Budget is the source of the Departmental Budget and the budget is overdue, Tracker holds invoices until the budget is submitted.
If the Law Firm Matter Budget is the source of the Departmental Budget, designated budget reviewers receive an Action Items alert and email notification to review Law Firm Matter Budgets.
Periodically throughout the fiscal year
Budgets can be edited (if not locked) and saved, but no reforecast is taken.
Companies can request or require reforecasts of the budget that is the source of the Departmental Budget (Law Firm Matter or Company Budget) periodically throughout the year.
Law firm users and designated budget reviewers receive an email notification and—if updating is required—an Action Items alert to enter reforecasts.
Whatever budget is in place on the day the reforecast is due will be saved as that reforecast, providing a permanent snapshot of the department's spending projections at that point in time.

Set up matters for budgeting, auditing, and reporting

Matters are the building blocks for all Tracker functionality, including budgets. Budgets must be attached to a matter or matter group. Therefore, it is important to set up matters correctly to ensure accurate budgeting, auditing, and reporting. For example, budgets must be charged to businesses, so companies should assign appropriate default accounting codes to each matter.
A matter creator must select the appropriate matter type (claim, litigation, etc.) to ensure that the initial budget is due at the right time, and that the appropriate auditing settings are used. Different matter types have different settings regarding whether budgets are required, what type of budget should be used, and how over-budget auditing should be implemented.
Matter groups
You can set up a matter group to create an overall budget for multiple matters. If a matter group is created and several matters are assigned to it, then you have the option of entering a single company bat the matter group level, rather than for each individual matter.
note
Companies must create a company budget as the source of a matter group departmental budget.
For example, assume that your company is defending many toxic tort lawsuits. If you want to enter only one company budget across all toxic tort matters, then you could create matter group called Toxic Tort and assign each matter to the group. Although law firms would still enter their individual budgets for each matter, a single, aggregate company budget could be entered at the matter group level. The company could then track spending for toxic torts as a whole. However, be aware that when individual matters have different detail settings, such as accounting code or organizational group, a spending to budget report may not break down spending by the desired criteria.
Budget setup considerations
Before using budgets in Tracker, your legal department should analyze a number of setup options. Below is a list of some of the most important budgeting decisions.For law firm budgets:
  • Which company users can edit/review/approve budgets?
  • Budget format: By default, when entering fiscal-year budgets, should the budget be broken down monthly, quarterly, or annually?
  • How long should law firms be given to submit the initial budget?
  • When should next year's budgets be due?
For departmental budgetsand reforecasts:
  • Which company users can edit/review/approve budgets?
  • Budget format: By default, when entering fiscal-year budgets, should the budget be broken down monthly, quarterly, or annually?
  • Should the Law Firm Matter Budget or a separate Company Budget be the source of the Department Budget/Reforecast? If Law Firm Matter Budgets are the default source of Department Budgets, they will be required for every matter by default, but this setting can be changed on a matter-by-matter basis in matter options.
  • When there is a Matter with multiple firms assigned, should the company enter one overall budget for the matter or separate budgets for each firm?
  • How often and when are reforecasts due?

Related content

This article applies to:

  • Product: Legal Tracker
  • Subject: Budget
  • Audiences: Company