The numbers that pricing, billing and finance teams reach for. These are the concepts most likely to be used inconsistently across systems — fixing that fixes a lot.
Duration
The time between the start and end of a matter or part of it. Distinct from the effort required — a matter may run for months while requiring only a handful of hours.
Pricing model
The basis on which a client is charged — time-based charging, fixed fees, capped fees, success fees, retainers, blended rates and combinations of these.
Budget
The expenditure authorised by a client for a matter or part of it. May be revised. Where a fixed fee has been agreed, the budget is the agreed price.
Estimate
A non-binding projection of the likely input cost, price, duration or other variable required for a matter, workstream, phase or task.
Projection / Forecast
Neutral words for describing anticipated input cost, price, duration or other variable, without the bindingness suggested by budget or the imprecision of estimate.
Actuals
The actual input cost, price, duration or other variable as in fact required (as opposed to projected).
WIPWork in progress
Time and other billable inputs recorded on a matter which have not yet been billed to the client.
Invoiced
The sums actually billed by a legal services provider to its client.
Debtors
Invoiced sums not yet paid.
Paid
Invoiced sums which have been paid (or collected).
Realisation
The percentage of the value of work done (at agreed or benchmark rates) that is invoiced or collected. A core measure of pricing discipline.
Capacity
The availability of a person, team or organisation with the necessary skill and experience to take on work, having regard to existing commitments.
Internal cost
The cost to an organisation of delivering a matter or other legal work — relevant for both internal teams and outside-counsel cost-to-serve analysis.
Effort
The amount of human work input required to complete a matter, workstream, phase or task — typically measured in hours or days. Distinct from duration.
Rate
The unit cost of human effort, expressed as a monetary amount per unit of time. Rates appear in three flavours: charge-out rate, internal cost rate and benchmark rate.
Profitability
The financial return generated by a matter, client relationship or portfolio after accounting for the internal costs of delivery.
Narrative
A written description of the work done on a matter or specific part of it. Billing narratives serve two distinct purposes: they justify the bill to the client, and they record what was done for internal use.
Expenses
Costs incurred in the course of a matter that are passed on to the client separately from the main fee — disbursements, court fees, expert fees, travel.
Variance
The difference between projected cost, duration or other figures and how they actually turned out.
Write-off
The variance between the recorded value of WIP and the lesser amount billed, reflecting a decision not to charge the client for some part of the work done.
Lock-up
A cashflow metric — the total working capital tied up in WIP and debtors taken together. Often expressed in days.