Budget Mastery: The 100-Book Experiment Continues

  • September 20, 2017
  • Jonathan Cullen, CIC.C

Budget Mastery: The 100-Book Experiment Continues

Budget. No six-letter word in the history of law department management has caused more torment, cajoling, strong-arming or capitulation. Despite its appearance as a seemingly simple estimate of income and expenditure for a set period of time, the law department manager often reviles it as a constraint on her team’s vision, an unrealistic set of handcuffs on a perfect plan designed to catapult this legal team beyond cost centre and drive her organization to glory.

Whenever I’m gripped by this budget- induced fever, I find it useful to ground myself in reality and perspective. As I described in our spring and summer issues, I recently endeavoured to read 100 books, in part to gain such perspective. Here are the learnings I would apply to managing a budget.

  1. Understand what the CEO and CFO want you to know. There’s no getting around it: you need to be able to navigate financial concepts and speak the language if you are going to successfully manage your legal budget. But that is a very limited and unambitious objective.

    From a broader perspective, honing these skills allows you to elevate simple legal advice to meaningful counsel based on practical financial impact. No in-house counsel can be truly effective without operating at this level.

    Absorbing Ram Charan’s What the CEO Wants You to Know or Josh Kaufman’s The Personal MBA are great starting points. Adam Bryant’s insights from over 200 CEO interviews described in Quick and Nimble is a window into the concerns and dreams of business leaders.

    Don’t neglect to leave think time to take advantage of or mitigate random events as described in Nassim Nicholas Taleb’s engrossing and somewhat disturbing The Black Swan: The Impact of the Highly Improbable.
  1. Budgets are relationships. Like anything else in life, you’re more likely to get what you ask for if you have a relationship and credibility with the person from whom you’re asking. This track record is not built overnight and it’s too late to do so when you’re already in need. Demonstrate that you understand the value of the organization’s resources. Having good working relationships with members of your management team is vital, as set out in John Kotter’s Power and Influence: Beyond Formal Authority.
  1. Develop a reputation as an evidence-based storyteller. Your financial underpinning in any budgeting situation must withstand deeper probing. Works like The Halo Effect and Moneyball will train you to spot biases, fallacies and weaknesses in assumptions. But even with solid underlying data and proof points, you still need to weave them into a compelling narrative. As Taleb says, “You need a story to displace a story.”

    Get into the rhythm of making business cases and doing so through story. Stephen Denning’s The Leader’s Guide to Storytelling or Chip and Dan Heath’s Made to Stick offer solid frameworks. In Jane Mayer’s political exposé, Dark Money, we see very effective uses of storytelling, though not for noble
    purpose.
  1. Don’t just hire outside counsel—create value with them. For most law departments, external legal advisors eat up the lion’s share of the budget. The Pareto principle then demands that you put a significant amount of energy and time into managing this line item.

    While there are many different quantitative methods to address cost reduction efforts with outside counsel, do not underestimate the impact you can have on the other side of the equation: value creation. My organization leverages its scale through use of our Pfizer Legal Alliance, a group of preferred firms around the world. What is central to this concept, in addition to the cost structure, is the energy both client and firms put into developing relationships, learning the business and thinking in news ways. What underpins this is the desire for long-term relationships. I challenge them to make my problems their problems.

    In a more innovative structure, that is not impossible. When considering how best to deliberately design your next relationship with a law firm, try the simple structure in the classic The 7 Habits of Highly Effective People: be proactive, begin with the end in mind, put first things first, think win-win, seek to understand, combine strengths and sharpen your saw. Your firm will be more engaged and suddenly the focus will no longer be solely financial.
  1. Balance trust in your boss with fighting for your department. Your boss, by definition, has a  broader perspective on where the legal department fits into the overall strategy of the organization and how its budget is viewed. Rather than seeking to explain why your department is a unique flower, try to understand her needs and viewpoint. The organization, as a whole, always comes first. A pass through Niall Ferguson’s Empire: How Britain Made the Modern World is a historical education on how to allocate resources across a fractured and diverse organization.
  1. Recognize what is invaluable. Always keep true to your organization’s mission, purpose and core values. If they are just faded words on a crooked, dusty plaque on a wall next to the bathroom, it
    is nobody’s fault but your own. In-house counsel can and should have tremendous influence over an organization’s culture. If a particular strategy or activity is central to your organization’s identity or sustain ability, it is your responsibility to fight for resources to drive success. Learn about the
    impact of losing something truly invaluable in Vanished Smile: The Mysterious Theft of the Mona Lisa.

Ultimately, and counterintuitively, the restriction of a budget frees you. It sets guideposts and forces you to think more creatively. With excess comes laziness; with scarcity comes ingenuity. It’s another test
you must pass as in-house counsel, manager and leader. And it’s an important one. The conscious mastery of the allocation and maximization of your organization’s precious resources can be a central element in the transformation of your legal department into a strategic partner of impact.

All that from a six-letter word.

Jonathan Cullen, CIC.C, is Vice President, Legal Affairs & General Counsel at Pfizer Canada Inc., and uses six-letter words on a regular basis. Follow him on LinkedIn.