Law Firm Annual Budget Planning Checklist

Export from Clio, Centerbase, PCLaw, or whichever PMS the firm uses. Break out by practice group (litigation, transactional, IP, family) and fee type (hourly, flat, contingency, AFA) so the forecast can be built up the same way.

Realization (billed / worked) and collection (collected / billed) by timekeeper and by practice group. Junior associate realization below 85% is a write-down problem worth flagging before next year's hours target gets set.

Walk the contingency docket with the responsible partners. Apply a probability and timing weighting to each matter — gross settlement, fee percentage, lien deductions, expected close quarter. Treat anything past appellate review separately; those don't fund this year.

Rent, utilities, phones, PMS license (Clio / MyCase / Centerbase), DMS (NetDocuments, iManage), e-filing subscriptions (PACER, NYSCEF, File & ServeXpress), Westlaw or Lexis, and any eDiscovery platform retainer. Pull current invoices rather than relying on last year's totals — vendors raised prices.

Get the renewal quote from the carrier 60 days before the policy anniversary. Premium scales with headcount, practice mix, and prior-claims history; a new high-risk practice area (securities, M&A) materially shifts the quote.

Base salary, payroll taxes, benefits, and the discretionary bonus pool tied to billable-hour and origination targets. Equity partner draws sit separately in the cash-flow model — don't double-count.

PMS migration, DMS upgrade, eDiscovery platform shift, attorney laptop refresh cycle, conference-room AV, security stack (MFA, MDM, endpoint protection). Tag each with a useful-life estimate so it amortizes correctly.

Score against payback period, partner strategic priorities, and risk-mitigation value (a security investment with no direct ROI may still rank above a nice-to-have). Defer anything below the line until the mid-year review.

Pick the funding source: operating reserves (no partner action needed), bank financing (line of credit or term loan), or a partner capital call. Capital calls require partnership-agreement-defined notice and a partner vote — plan accordingly.

Roll the revenue and expense plans into a 12-month cash forecast. Litigation firms with heavy contingency mix will see lumpy months — model the trough rather than averaging it away.

Pass-through entity tax (PTET) at the firm level where elected, plus partner-level estimates. Schedule draws against the cash forecast — drawing into a thin month is the most common cause of mid-year line-of-credit pulls.

Run a 15% revenue-shortfall scenario against the cash forecast. Identify the month where reserves go negative — if it's inside the year, the budget needs a rebuild rather than a tweak.

Pull discretionary spend first — marketing, training above CLE minimums, deferred capex. Compensation reductions are last and require partner-level conversation, not an administrator decision.

Verify per-claim and aggregate limits against current matter exposure — a single deal-in-progress over the per-claim limit is an underinsurance signal. Cyber coverage is increasingly carved out or sublimited; read the endorsements.

Standard set: realization, collection, billable hours per attorney, WIP days, AR days, revenue per lawyer, profit per equity partner. Specify monthly vs. quarterly reporting and who receives each report.

Standing slot on the management committee agenda. Variance over 10% on any line is a drill-down trigger, not a footnote.

Walk through the deck at the partner meeting. Capture the decision, the managing partner's signature, and any conditions or revisions raised in discussion so the recirculation step has a clean record to work from.