Capturing More Time and Billing It Too
By Ellen Freedman, CLM
I
recently returned from the ABA TechSHOW, where I
provided a record three presentations. One was titled “Capturing More Time and
Billing It Too!” The session had a significant turnout, which was an indication
of the importance of the topic area, as there were so many other excellent
competing sessions. It’s easy to tell when a seminar is going well based on
observation of the audience: participants nod in agreement, take copious notes,
ask questions and come up to the podium afterwards to discuss particular points
in further detail. This presentation showed all the signs of success, and the
evaluations confirmed it. So why was this presentation so compelling?
Of all the elements everyone has to
work with, none is more precious than time. Regardless of the basis upon which
you bill your clients, meticulous timekeeping achieves multiple crucial goals.
For the lawyer who bills by the hour, your ability to capture accurately the quantity of your billable time directly
affects the total amount of time you must spend working in order to meet your
billable time goals; the greater your “capture” rate, the more time you can
spend with your loved ones, on rest and relaxation, and pursuing outside
interests. Your ability to describe the quality
of your billable time accurately will allow you (or your firm) to craft timely,
persuasive bills that stand the best chance of achieving every lawyer’s
ultimate goal in every billable matter: a satisfied client who pays the bill
promptly and in full. For the lawyer who bills on a flat fee or contingent
basis, your ability to capture time accurately will provide invaluable data
regarding profitability of individual client matters and practice areas, and
even about efficiencies in the handling of matters.
To help you capture both the
quantity and quality of your billable time and get it billed with the highest
likelihood of getting paid, here are some of the ideas presented in my TechSHOW session; adopt and adapt those that you think will
work for you:
1. Track all of your time, whether billable or
not. When time tracking
is discretionary, time will be missed. If you have to think about whether you
should track the time you are about to spend or if you have to decide whether
to record the time that you just spent, that makes it too hard. Tracking
everything takes that all away. You simply track the time you spend each day —
and you track all of it. At the end of
the day you can compare the hours at the office with your total recorded
hours. If you’re tracking all time, billable or nonbillable,
you will know if you have accounted for all your time.
All that nonbillable
time adds up! Track the time you spend on administration, marketing, bar
activities, CLE, community activities, etc. It is important to know how much of
your time you spend on these types of things and whether you are getting
results consistent with efforts. It may also help determine when it is time to
bring in an assistant.
If you track your time spent on CLE
just like you track time on a billable matter, you can always look to see how
many hours you have/need. Tracking all your time will help you to set realistic
billable hour goals. Experience shows that for every billable hour logged,
there can be as many as 20 to 30 minutes of nonbillable
time spent. So, is it realistic to have a goal of 10 billable hours a day? Not
unless you are willing to work between 13 and 15 hours a day.
In the absence of good data, you
cannot make good business decisions. How will you know whether your contingent
or flat fee matters are profitable unless you measure the investment of time
against the amount earned? Probably the most
convincing reason to track all your time is this: A little translates into a
lot. Using conservative estimates, if you bill at $150 an hour and you neglect
to track a quarter hour a day (just 15 minutes), you lose $37.50 a day, $187.50
a week, $787.50 a month and $9,450 a year! If you lose more time per day or you
bill more per hour, those numbers all go up. I don’t know about you, but I
would love to have an additional $10,000 a year in my bank account without
having to work any harder.
2. Develop good timekeeping
habits. A difference in
timekeeping habits makes a big difference in the bottom line. So let’s
acknowledge that it’s not a natural skill. But neither is learning to drive a
car. At first you have to think about every single action —signaling, steering,
braking, shifting, observing traffic. Now you get from
Point A to Point B and you don’t even remember starting the car. Think about
your most recent car drive. Do you even remember stopping at lights? Turning on
your signal? No. That’s because the skill has become so ingrained that you
don’t even have to think about it. You’re on autopilot. It took some effort for
a while, but now it just “happens,” doesn’t it? You need to develop your
timekeeping skills to the same level. Trust me,
eventually it’s so ingrained you don’t even think about it. And that’s when you
reap the economic and lifestyle rewards.
From new grads to lateral hires,
every lawyer at the firm should be taught the firm’s time recording policies.
It is a proven fact that time recorded several days after the work takes place
will invariably shrink. As much as 30 to 40 percent can be lost in a matter of
days. Worse still, in an effort to account for all the time spent some clients
will be charged for time that was spent on other clients’ work. In order to be
accurate, time should be recorded each day without fail and handed in or immediately
recorded in the computer on systems where lawyers can input their own time.
If a new lawyer exhibits poor
timekeeping habits, the firm should take immediate corrective action, because
the habits will only get worse over
time, not better. Take a close look at any lawyers whose billable hours are
unusually low compared to the hours put in at the office. Are they
self-editing? Poor recorders? Perhaps they need time
management training or a quieter workspace. For some, more hours at the office or an adjustment to compensation may be
the right solution.
3. Provide good tools for
time tracking. Take a
look at the tools you’ve provided for timekeeping. Do you have a variety of
manual timesheets available to accommodate the different recording styles of your
lawyers or is it a one-size-fits-all environment? And speaking of
one-size-fits-all, do you allow lawyers to record their own time directly into
your billing program? Have you provided case management or time and billing
software, which have pop-up timers and text macros to facilitate easy and
accurate time recording? Even Outlook’s Journal function can be a real benefit
to someone who otherwise has no tools to assist in accurate timekeeping.
Remember, it’s not the slow days
that are problematic for time recording. It’s the really hectic days, where
lots of dollars are at stake, that tend to produce the
least time recorded in the absence of appropriate tools. Don’t forget to
provide tools to track time when on the road. There are several time tracking software
packages available, plus optional modules on other packages, to help you to
track your time on a PDA. Some of them can even track your expenses and import
them directly into your billing system either as you enter them or when you
return to the office.
4. When it comes to getting
paid, timing is everything.
There is something called the “curve of appreciation” in a matter. Simply put,
there is often one (or more) point during the course of representation when the
client will be particularly impressed or appreciative of your efforts. If you
can manage to present your bill for payment at one of those points, you will be
paid quickly. For that reason, the optimum time to bill is always when you are
at the top of the bell curve of appreciation.
Most clients have a pay cycle of
some sort. If you know your client’s pay cycle and you get your bill in before
the cutoff, it will be paid much quicker than if it arrives right after the
cutoff. Let’s assume for a moment that
you cannot manage to bill at the top of the bell curve of appreciation or maybe
the matter doesn’t have a clear one. Let’s assume also that you just can’t
manage to send out bills individually during the month based on client payment
cycles. If that’s the case, then you need to make sure that your bills go out
each month in order to arrive at their destinations by no later than the 10th
of the month. Why? Psycholo-gical impact. By sending your bills early each month you
demonstrate that it is a priority at your firm and thereby also communicate
that getting paid is important to you. In addition, if you examine your own
receipt of bills at the office and home, you will notice that most of the
important bills arrive at the very beginning of each month.
5. Billing methods vary;
discuss alternatives with clients. Explore
the ability to bill on a flat fee basis or to demonstrate you are willing to
assume some of the risk with your client by taking a lower stated fee and
working in a “kicker” or bonus for exceptional outcome or performance. One thing
clients are clear about is that they want predictability regarding their legal
expenses whenever possible. Although hourly work is comforting to both client
and the firm in terms of relating fees to work performed and in predicting firm
revenues based on workable hours in a given year, it does nothing to ensure
that the value of the services
matches the size of the bill in the client’s eyes.
6. Your bill is a
communication vehicle.
The bill serves two purposes. First is to get paid. And second is to leave the
client with a favorable impression of the services rendered. The bill is
another tool for client communication. Make sure it reflects the same level of
professionalism as your services. And record all entries with the objective of
conveying the value of the service, not just the time involved. For example,
listing “review file” over and over will only frustrate clients and make them
feel they are being overcharged. On the other hand, “evaluate file documents
based on relevance to theory X” may provide a better indication of the value of
the time spent.
If you want to make sure you get
your bills done each month in a timely fashion, you should develop a routine
that involves teamwork between you and your support staff.
7. Bill frequently and in
smaller increments to make it easier for the client to pay. Use a consistent cutoff date for
printing pre-bills and impose a deadline for returning the pre-bills with
edits. Appoint a “billing czar” who oversees and appropriately challenges
billing discounts in excess of a designated percentage of the total fees or
costs. A smart goal is to avoid unseen discounts.
Let the client know which credit
cards you accept. If questions are raised, research and resolve problems
immediately. That’s just good, basic customer service.
There is no doubt that a world of
difference can be made in the bottom line of any law firm when consistent and
solid practices are employed from input through conclusion of a matter. They
start with a clear understanding of expectations on both sides and
memorializing them in an engagement letter, a copy of which is signed by the client and retained by the lawyer.
Accurate and contemporaneous re-cording of all time worked is the next
essential step. Self-editing must be scrupulously avoided. A variety of tools,
including automated time tracking and entry, should be employed by the firm.
Prompt billing and consistent “no exception” follow-up until full payment is
received completes the picture.
Ellen Freedman, CLM, has served as the Law Practice
Management Coordinator for the Pennsylvania Bar Association since 1999. In that
capacity she assists PBA’s members with management issues and decisions on the
business side of their practice, including areas like technology, human
resources, risk management, setting up a practice and so forth. Members are
encouraged to contact Ellen through the 800 “Hot Line” at PBA headquarters,
(800-932-0311 x2228) or through email ([email protected]).
Ellen managed inside law firms for twenty years. Most of
that time was spent in a mid-size (thirty+ attorney) firm environment. Ellen
has achieved the designation of Certified Legal Manager through the Association
of Legal Administrators. She holds a Certification in Computer Programming from
Maxwell Institute, a Certification in Web Site Design from
Ellen has been a frequent author and speaker on law firm
management issues on a national, regional and local level.