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Some excellent advice from Antony Smith of Legal Project Management Limited, writing in Litigation Funding:
“Generally, estimating is best done when based on historical data of previous projects which are similar to that at hand. Lawyers are lucky here, as their practice management systems and/or case management systems should hold this kind of data. … Ideally, the historical data used should be from cases the lawyers responsible for preparing the current estimates have themselves worked on previously. In the absence of that, lawyers should mine historical data of similar cases worked on by others in their firm. My advice would be to try and avoid any industry benchmarks – the whole point is to estimate the effort and cost it will take you and your firm to complete the matter.”
I fear this is the least understood area of costs budgeting and will be, in the early days, where things most go wrong.
Many of those preparing budgets will not be using historical data but will be using their “experience”.
To mine historical data at firm level, let alone fee earner level, so the data properly fits the phases’ stage of budgeting is generally going to be a fantastically time consuming, and therefore expensive, task for which it will not be possible to charge.
Even where costs firms have undertaken serious analysis of their historical data, this will often only produce industry averages. To apply this data to a new firm of solicitors seeking help with their costs budgeting is a recipe for disaster.