# Legal Spend Budget and Forecast: [Legal department], [Fiscal year]

> An annual budget for an in-house legal department's external spend,
> with quarterly phasing, matter-level budgets, the quarter-end accrual
> process, variance reporting and the reforecast. Structure informed by
> the Financial Management area of the CLOC Core 12 (Corporate Legal
> Operations Consortium, What is Legal Operations guide, August 2020),
> which lists budgeting, accruals and forecasting and e-billing among
> its goals. Accounting references (IAS 37, ASC 450-20) are named for
> orientation only. Replace every `[bracketed]` value and every row
> marked *Example*. This is a documentation format, not accounting or
> legal advice; agree the method with your finance team.

<!--
Guidance: How to use this template
- Build the budget bottom-up from known matters and recurring work,
  then add a reserve for matters you cannot yet name. Agree the
  categories with finance so that they map to the general ledger.
- Fill section 2 (budget by category) and section 3 (matter budgets)
  first. Sections 4 to 6 run every quarter.
- All figures are in [USD] and exclude internal headcount, which sits
  in the department's staff budget.
- The worked example is fictional: Quillmere Systems Ltd, fiscal year
  FY2027 running 1 July 2026 to 30 June 2027. Q1 is July to September
  2026. Delete it before use.
- Related documents: Annual Budget (`finance/annual-budget`), Rolling
  Forecast (`finance/rolling-forecast`), Variance Analysis
  (`finance/variance-analysis`), Month-End Close Checklist
  (`finance/month-end-close-checklist`), Outside Counsel Guidelines
  (`legal-ops/outside-counsel-guidelines`), Matter Intake and Triage
  (`legal-ops/matter-intake-triage`), Legal Register
  (`compliance/legal-register`).
- Common pitfall: booking legal fees only when invoices arrive. Firms
  invoice weeks or months after the work, so without accruals the
  quarter looks cheap and the next one expensive.
-->

## Document control

<!-- Guidance: The general counsel owns the budget; the finance business partner reviews it. Each reforecast is a new version. -->

| Field | Value |
|---|---|
| Document ID | [LEG-FIN-BUD-FY27] |
| Version | [1.1] |
| Status | [Draft / Approved / Reforecast] |
| Owner | [@general-counsel] |
| Prepared by | [@legal-operations-manager] |
| Reviewed by | [@finance-business-partner] |
| Fiscal year | [FY2027, 2026-07-01 to 2027-06-30] |
| Currency | [USD] |
| Last updated | YYYY-MM-DD |
| Classification | [Confidential, internal] |

### Revision history

| Version | Date | Author | Change |
|---|---|---|---|
| 1.0 *(Example)* | 2026-06-15 | Legal operations manager | Budget approved |
| 1.1 *(Example)* | 2026-10-12 | Legal operations manager | Q1 actuals, accruals and reforecast |

## 1. Assumptions

<!-- Guidance: List the assumptions that drive the numbers, so that a variance can be traced to the assumption that changed. -->

| ID | Assumption *(Example)* |
|---|---|
| AS-01 | One active dispute (MAT-2026-0142) proceeds to disclosure in FY2027; trial not before Q4 |
| AS-02 | Panel firm rates fixed for 12 months under the outside counsel guidelines |
| AS-03 | Patent filings: 6 new families, maintenance on 22 existing families |
| AS-04 | No acquisition or financing that needs external transaction counsel |
| AS-05 | CLM and e-billing subscriptions renew at current price |

## 2. Budget by category

<!-- Guidance: One line per spend category agreed with finance. Phase each line by quarter based on when the work is expected, not evenly by default. Check that quarters add up to the annual figure. -->

| Category | Annual budget | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|
| Litigation (outside counsel) | 180,000 | 30,000 | 60,000 | 60,000 | 30,000 |
| Commercial contracts (outside counsel) | 60,000 | 15,000 | 15,000 | 15,000 | 15,000 |
| Employment advice | 40,000 | 10,000 | 10,000 | 10,000 | 10,000 |
| IP prosecution and maintenance | 75,000 | 15,000 | 20,000 | 20,000 | 20,000 |
| Privacy and regulatory | 50,000 | 20,000 | 10,000 | 10,000 | 10,000 |
| eDiscovery and hosting | 35,000 | 5,000 | 10,000 | 10,000 | 10,000 |
| Legal technology (CLM, e-billing) | 48,000 | 12,000 | 12,000 | 12,000 | 12,000 |
| **Total *(Example)*** | **488,000** | **107,000** | **137,000** | **137,000** | **107,000** |

## 3. Matter budgets

<!-- Guidance: Each significant matter has a phase budget from the firm (see the outside counsel guidelines). The category line in section 2 is the sum of matter budgets plus a reserve. -->

*Example: MAT-2026-0142, supplier dispute, Ashcombe Ledger LLP.*

| Phase | Budget | Actual and accrued to Q1 | Estimate to complete | Estimate at completion | Variance |
|---|---|---|---|---|---|
| Early case assessment | 20,000 | 22,000 | 0 | 22,000 | +2,000 |
| Pleadings | 25,000 | 14,500 | 10,500 | 25,000 | 0 |
| Disclosure | 60,000 | 0 | 76,000 | 76,000 | +16,000 |
| Trial preparation | 35,000 | 0 | 35,000 | 35,000 | 0 |
| Trial | 10,000 | 0 | 10,000 | 10,000 | 0 |
| **Total** | **150,000** | **36,500** | **131,500** | **168,000** | **+18,000** |

The litigation line of USD 180,000 is this matter (USD 150,000) plus a
reserve of USD 30,000 for disputes not yet known. The disclosure
increase comes from a larger data volume found when the legal hold was
issued (`legal-ops/legal-hold-notice`).
The early case assessment actual of USD 22,000 is the July invoice
(USD 3,895) plus the August invoice approved at USD 18,105 after
invoice review (`legal-ops/outside-counsel-guidelines`, section 6).

## 4. Quarter-end accruals

<!-- Guidance: Accrue fees for work performed but not yet invoiced at each period end. Ask firms for estimates by a fixed day; where a firm does not respond, estimate from the matter plan and record the basis. Reverse the accrual when the invoice arrives, following your finance team's procedure. -->

| Matter or category | Source of estimate | Accrual at 2026-09-30 *(Example)* |
|---|---|---|
| MAT-2026-0142 pleadings | Firm estimate of unbilled time | 14,500 |
| Commercial contracts, panel firm | Firm estimate | 3,000 |
| Privacy and regulatory, regulator response | Internal estimate: phase plan, 60% complete of USD 10,000 | 6,000 |
| **Total accrual** | | **23,500** |

Process:

1. By the [3rd] business day after quarter end, legal operations asks
   each firm with open matters for its estimate of work done but not
   invoiced (`legal-ops/outside-counsel-guidelines`, section 8).
2. Legal operations checks each estimate against the matter budget and
   e-billing data, and records the basis.
3. Finance books the accrual under the month-end close
   (`finance/month-end-close-checklist`).

**Fee accruals are not loss provisions.** The possible cost of losing
or settling a claim (for example the supplier's claim in MAT-2026-0142)
is a separate assessment led by finance with counsel: under IFRS, IAS
37 Provisions, Contingent Liabilities and Contingent Assets; under US
GAAP, ASC 450-20 Loss Contingencies. Some organisations under US GAAP
make a policy choice on whether expected legal costs are accrued with
the contingency; follow your accounting policy.

## 5. Actuals and variance

<!-- Guidance: Actuals are invoices received plus accruals for the period. Explain every variance above the threshold in one line and tie it to an assumption from section 1. -->

*Example: Q1 FY2027, July to September 2026. Threshold for comment:
USD 2,500 or 15%.*

| Category | Invoiced | Accrued | Total actual | Q1 budget | Variance | Variance % |
|---|---|---|---|---|---|---|
| Litigation | 22,000 | 14,500 | 36,500 | 30,000 | +6,500 | +21.7% |
| Commercial contracts | 11,200 | 3,000 | 14,200 | 15,000 | -800 | -5.3% |
| Employment advice | 6,400 | 0 | 6,400 | 10,000 | -3,600 | -36.0% |
| IP prosecution and maintenance | 17,800 | 0 | 17,800 | 15,000 | +2,800 | +18.7% |
| Privacy and regulatory | 9,500 | 6,000 | 15,500 | 20,000 | -4,500 | -22.5% |
| eDiscovery and hosting | 4,200 | 0 | 4,200 | 5,000 | -800 | -16.0% |
| Legal technology | 12,000 | 0 | 12,000 | 12,000 | 0 | 0.0% |
| **Total** | **83,100** | **23,500** | **106,600** | **107,000** | **-400** | **-0.4%** |

Comments on variances above the threshold:

- **Litigation +6,500:** the dispute moved to a letter before claim
  earlier than planned (AS-01); pleadings work started in September.
- **Employment -3,600:** no contested cases in the quarter; timing, not
  a saving.
- **IP +2,800:** two filings brought forward from Q2 (AS-03); timing.
- **Privacy -4,500:** regulator response cheaper than the phase plan.
- **eDiscovery -800 (-16.0%):** above the percentage threshold but
  small in amount; hosting started later than planned.

## 6. Reforecast

<!-- Guidance: Reforecast at least quarterly. Show the full-year forecast against the approved budget and say which items need approval. -->

| Category | Approved budget | Full-year forecast | Change |
|---|---|---|---|
| Litigation | 180,000 | 198,000 | +18,000 |
| All other categories | 308,000 | 308,000 | 0 |
| **Total** | **488,000** | **506,000** | **+18,000 (+3.7%)** |

The litigation forecast adds the USD 18,000 increase from section 3
and keeps the USD 30,000 reserve. The increase is 10.0% of the
litigation line and 3.7% of the total budget. Decision needed:
[approve the increase / fund it from the reserve / ask the firm for a
capped fee for disclosure].

```mermaid
flowchart LR
  A["Matter budgets from firms"] --> B["Category budget and phasing"]
  B --> C["Approved annual budget"]
  C --> D["Quarter: invoices and e-billing data"]
  D --> E["Accrual estimates at quarter end"]
  E --> F["Actuals and variance"]
  F --> G["Reforecast and decisions"]
  G --> D
```

## 7. Savings and value tracking

<!-- Guidance: Record savings with a clear method, so that they are credible to finance. Separate avoided cost from timing differences. -->

| ID | Initiative | Method | Amount *(Example)* | Type |
|---|---|---|---|---|
| SV-01 | Invoice review under billing rules | Reductions accepted by firms (August invoice, MAT-2026-0142) | 1,825 | Realised saving |
| SV-02 | NDAs moved to self-serve | Hours avoided times blended rate | [Amount] | Cost avoidance |
| SV-03 | Fixed fee for disclosure phase | Fixed fee against estimate | [Amount] | Pending |

## Standard and licence note

Structure informed by the Financial Management area of the CLOC Core
12, described in the Corporate Legal Operations Consortium guide What
is Legal Operations (August 2020), cited by name only; see
https://cloc.org/what-is-legal-operations/. Accounting standards named
for orientation: IAS 37 Provisions, Contingent Liabilities and
Contingent Assets (IFRS Foundation,
https://www.ifrs.org/issued-standards/list-of-standards/ias-37-provisions-contingent-liabilities-and-contingent-assets/)
and FASB ASC Topic 450, Subtopic 450-20 Loss Contingencies
(https://asc.fasb.org/). Check the current texts and your accounting
policy with finance. All figures are fictional examples computed for
this template; the organisation is fictional. All text is original
wording. This is a documentation format, not accounting or legal
advice.

Template licence: MIT.