May 18, 2005
Tracking time
Yesterday, I was having a discussion with the president of Juris, Inc. concerning spoilage in a law firm.
If the business end of a widget factory is widgets, then the business end of a law firm is billable hours. The more you produce the more units you have for sale. It follows that if a law firm decides to increase its revenue, it will need to produce more hours. One of the first things it can do is eliminate or reduce spoilage–time that gets worked but not counted.
Many fee earners still record time the old fashioned way - handwritten notes given to accounting or to a legal assistant to decipher and manually enter into the firm’s billing system. What is wrong with this tried and true method? You are guaranteed to under report billable time. It is the classic scenario of working hard and not getting paid for it.
- A busy fee earner, without the tools to easily track time as worked, overlooks short, unplanned phone conversations with clients, opposing counsel or others regarding a billable matter.
- The manual method tends to focus on blocks of time spent on legal matters. Time spent reviewing bills or other case-related administrative efforts go unreported.
- After-the-fact methods of recording time, as opposed to as-worked methods, usually result in under-estimating the actual time devoted to the task preformed.
- Under-reported time increases when work is performed out of the office. Phone calls and e-mail still reach the fee earner and time responding to them is often overlooked.
If an attorney billing at $200 per hour neglects to capture 15 minutes of billable time each day, it translates roughly to $250 per week. The 15 lost minutes daily can add up to about $12,000 a year per lawyer. In a firm with a leverage of just 1 to 1, that adds up to $20,000 or more per year in per partner income. My experience is that the actual unreported billable time in most law firms is much higher.
Timekeepers need the tools to easily record and report time as work is performed. They need to be able to do that anywhere and at anytime. Management needs the tools to monitor reported time against timekeeper targets. They need that information in time to change the outcome.
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Filed under Law Firm Bus Model, Management, Policies/ Procedures by Tom Collins