Definition
The Legal Spend Forecasting Accuracy (LSFA) metric assists legal departments in assessing the accuracy of their forecasting efforts. By comparing forecasted spend against actual spend, legal departments can identify areas for improvement, make any necessary adjustments in their forecasting processes, and identify where AFAs can be negotiated to improve spend transparency.
Accurately forecasting legal spend is challenging due to the unpredictable nature of some legal matters. To improve LSFA, legal departments should adopt a systematic, data-driven approach. Analyzing historical spending patterns helps identify trends and variations, providing a better picture of future financial needs. This insight allows legal teams to make informed decisions about budget allocation and resource management, contributing to the organization’s overall financial health.
Data Sources
Data may be sourced from matter management systems, e-billing systems, accounting/finance records, management reports, and manual invoices.
Filters
Time Periods
Business Units
Practice Areas
Law Firms/Vendors
Person In Charge
Limitations
Legal spend forecasting faces “inherent uncertainty” due to reliance on estimates and unpredictable legal matters. Striking the right balance between high-level and detailed forecasting is crucial, as overly complex scenarios can hinder clarity and overwhelm stakeholders.
For a deeper dive into this metric and other KPIs, be sure to check out my book, Legal Operations KPIs on Amazon in English / Spanish or eBook on Google Play English / Spanish. It offers comprehensive insights and detailed explanations of over 80 metrics and KPIs to help you optimize your legal department's performance.
Visit LegalOpsKPIs.com for more information, exclusive resources such as expert interviews, a chart library, Excel templates, and to connect with a global community of professionals committed to advancing Legal Operations through data-driven insights.
See this article in Linked here: https://www.linkedin.com/pulse/metric-week-1-legal-spend-forecasting-accuracy-lsfa-mori-kabiri
InfiniGlobe is a full-service consulting and software company. We have 20+ years of industry experience working with top corporate legal departments and law firms. Contact us at info@infiniglobe.com or at (833) LGL-TECH.
Comments