October 16, 2006
Getting a Handle on Billing Attorney Write Downs
Recently I participated with a number of managing partners in a roundtable discussion of issues they are dealing with. An issue shared by most attendees dealt with write downs of billable time by the billing attorney before the bill even gets out the door of the law firm. The national consulting firm Altman Weil, Inc. referred to such write downs as “Invisible Expenses” because, in many firms, they go unaccounted for.
One attendee indicated that last year his firm initiated a policy that the managing partner had to approve any write down above a certain amount. As the attending partner explained, “There is always an explanation—since I’m not the responsible attorney, how can I second guess that billing attorney?”
Approval mechanisms seldom work. But there is something that will. Require any write down to have a Reason Code and then track and report those reasons and the amount of the write down. Don’t create many codes—just a few. For example:
We blew it
Associate took too long
Planned associate development activity
Exceeded client expectation
Relationship building
Measurement always improves performance. By tracking and reporting write offs, reason patterns are disclosed. Why does one billing attorney write down bills for “exceeding client expectations” at a significantly higher rate than other attorneys? Why do we make adjustments repeatedly for the same clients? Why are multiple billing attorneys writing down the hours of the same associate because that associate took too long?
You can’t second-guess individual decisions by responsible attorneys, but you can identify patterns, and that will lead to an improvement in billing realization.
PS: You can always add a code or two to center in on problem areas. For example, if you have a high volume of “associate took too long” write offs, you might temporarily expand that code into several that better explain why they took too long. Once the area is in control, remove the excess codes. Too many codes can hide the trees in the forest.
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Filed under Management by Tom Collins