When a legal matter nears its agreed budget, in-house teams face a tough balance: rein in spending without damaging the relationship with outside counsel. Budget overruns strain legal department finances and firm partnerships, but with the right approach, you can navigate scope changes and maintain trust.
Controlling outside counsel costs remains a top concern for most legal departments. According to Thomson Reuters 2024 Legal Department Operations Index, while many teams implement matter budgets, fewer than half require outside counsel to submit them, and even fewer actively manage those budgets. Those that do, however, report matter budgets as one of the most effective cost-control tools.
The message is clear: having a budget is good, but actively managing that budget is even better. Below, we share practical strategies—and law firm perspectives—to help you handle these conversations with confidence.
Strategies for Managing Scope and Spend Without Burning Bridges
Be Proactive About Scope Changes and Budget Creep
The best time to address a budget issue is before it becomes a full-blown problem. These tactical tips can help you avoid surprises and keep your matters on track:
- Set expectations upfront. In your engagement letter or outside counsel guidelines, define a not-to-exceed budget and clarify who can approve increases. This creates shared accountability from day one.
- Define a notification trigger. Require law firms to notify you when they reach a specific spend threshold (e.g. 80% of budget). Early warning = more time to adjust.
- Encourage openness – with justification. Let firms know you’re open to early scope or budget conversations, but expect a clear rationale. According to a Thomson Reuters article, legal teams should “encourage outside counsel to consult with you… but [emphasize] the need for strong justification.” If something changes, your firm should flag it early—and be ready to explain why it matters.
- Check in regularly. Agree in advance how often budget updates should happen. Even quick email updates can prevent budget surprises.
- Focus on scope, not blame. If a matter is nearing budget, review scope collaboratively: what was done, what changed, and why. Keep the tone solution-oriented: “We’re getting close to the cap. Let’s assess the next steps together.”
- Reprioritize if needed. If additional work is necessary, approve a revised budget or adjust scope to stay within limits. Always confirm changes in writing.
Law firms generally appreciate this approach. As Trina diNapoli, Director of Marketing & Business Development Ops and Systems at Jackson Lewis P.C., puts it:
“The earlier you talk about scope shifts or cost changes, the easier it is to stay aligned and build trust. It’s not just about managing numbers; it’s about managing the human relationship.”
Early, honest conversations are better for both sides because they help law firms plan, and help legal departments stay in control.
Want more tips for keeping matters on track from the start? Check out 5 Common Mistakes Legal Teams Make After Firm Selection—and How to Avoid Them for more strategies.
Use Technology to Drive Budget Accountability
Even with great communication, manual tracking makes it hard to catch budget issues in time. Modern legal tech can help ensure visibility, transparency, and trust.
Here’s how tools like Priori’s platform support both in-house teams and law firms:
- Centralize communication. In-app messaging and quote rationale tracking means all budget decisions and scope discussions are documented in one place.
- Track rationale for changes. When budgets shift, log not just what changed — but why. That transparency builds internal trust and helps firms scope future matters more accurately.
- Enable live spend tracking. Priori’s eBilling integration works with any provider to show real-time budget vs. actuals. Configure alerts when you hit 75%, 90%, or other thresholds so no one is caught off guard.
- Leverage ROI data. Priori’s RFP Analytics connects quotes to final outcomes, calculates cost avoidance, and tracks firm performance over time. That means smarter decisions next time — with real metrics to back them up.
As Alison Sinkevich, legal operations leader at GE Aerospace, explained after implementing Priori’s real-time spend tracking:
“We want real-time visibility into our budget vs. actuals and a way to evaluate our progress toward volume discounts. This will promote attorney accountability and enable more timely, informed budget discussions and proactive conversations around budget overages.”
The Bottom Line: Proactive Partnerships Prevent Overages
Budget conversations don’t have to be awkward. When you set expectations early, check in regularly, and use real-time data to track progress, you’re not just controlling costs — you’re building trust.
Firms want to deliver value. Legal teams want to avoid surprises. With the right tools and mindset, budget talks become alignment moments, not pain points.
Want to make managing outside counsel budgets easier and more transparent? Learn how Priori’s platform makes accountability simple on both sides. Request a demo.
