As this year’s budget season is coming to an end, it’s a great time to reflect on how law firms can go into the next budgeting season with more confidence. Below, I go through some of the best practices that can help law firms enhance their approach to budgeting and forecasting by eliminating archaic, manual processes and promoting a commercial mindset that optimizes its resources.
Traditional static budgets often fall short due to their rigid nature. Every day we see how the initial assumptions these budgets were built on can quickly become irrelevant as market conditions, client expectations, and internal priorities shift. The unanticipated financial gaps create more hurdles for your firm’s finance team and create more pressure on achieving your revenue and profitability goals. By embracing regular reforecasting, law firms can stay agile and maintain a sharper edge in managing their financial health.
First, it allows law firms to respond swiftly to changes, such as fluctuating demand for services, new regulations, or economic shifts. By updating forecasts frequently, firms can allocate resources in a more targeted way, redirecting efforts and budgets to areas that promise the highest return. This approach ensures that decisions are based on the most relevant information available, reducing the risk of misaligned spending and enhancing overall financial resilience.
The key to successful reforecasting lies in using a flexible financial tool that supports multiple iterations and adapts to changing scenarios. A dedicated legal budgeting and forecasting tool that empowers finance teams to modify projections without excessive manual work, allowing for more strategic and data-driven decision-making. This proactive stance not only supports more effective budget management but also strengthens a firm's competitive edge.
Encouraging partners to take ownership of their budgets is a critical component of effective financial planning in law firms. According to BigHand’s recent findings, 77% of law firms hold partners accountable for contributing to the budget, but 39% believe that increasing partner ownership would improve their overall processes. When partners are actively involved in the budgeting process, they gain a deeper understanding of the firm’s financial landscape and are more likely to align their team’s spending with overarching goals.
Partners who take part in budget planning can identify opportunities for cost savings, allocate resources more judiciously, and contribute valuable insights that enhance the overall accuracy and efficiency of the budget. This collaborative approach fosters a culture where financial stewardship becomes a shared responsibility.
Tools like BigHand Budgeting & Forecasting provide reliable, easy to access data so partners are able to do all of the above. By embedding budget accountability at the partner level, firms can build stronger financial strategies and ensure sustainable growth in a competitive legal market.
A notable 41% of law firms report that better visibility across the firm would significantly improve their budgeting and forecasting processes. Transparency in budgeting ensures that all relevant stakeholders have a clear understanding of financial expectations and goals. By making budget information accessible and understandable at various levels, firms can align departmental goals with the overall financial strategy, enhancing coordination and accountability. Facilitating collaboration firm-wide makes it easier to monitor progress and adjust strategies in real-time.
The role of technology in streamlining and improving budgeting cannot be overstated. Tools that support comprehensive budgeting, from initial planning to multiple reforecasts throughout the year, are essential for dynamic financial management. In fact, 39% of law firms recognize that a tool capable of managing the entire budgeting process—including periodic reforecasts—would significantly boost their forecasting accuracy.
A key trend among law firms is the strategic adoption of budgeting and forecasting tools to better manage financial planning. Currently, 48% of firms are planning to introduce such tools within the next 12 months to enhance their forecasting capabilities. By investing in robust solutions like BigHand Budgeting & Forecasting, that simplifies budget tracking, reforecasting, and partner collaboration, firms can create a seamless budgeting workflow that adapts to changing financial landscapes.
By following these best practices and leveraging technology like BigHand, law firms can elevate their budgeting and forecasting processes to drive better financial outcomes and sustained growth. Learn more about BigHand Budgeting & Forecasting in our latest guide, “The Path to Automated Legal Budgeting & Forecasting”.
Gain insight with the experience of those that have already implemented legal budgeting and forecasting technology, including commentary from top law firms that are seeing benefits like:
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