Why blowing away your fee target can still hide a big problem...

Today I saw yet another example of why too much focus on billed/collected fees can obscure important data you need to be reacting to early in managing the production of your fee-earners.

Let's call our employee, the subject of a March KMSFeedBack Report, a Senior Associate in a small Queensland firm.

At the end of March this fellow is shown in his FeedBack Report™ to have billed (and mainly collected) fees of $340,000... just under 110% of his fee budget for the nine months.

At first glance this looks great...show us more of these people I hear readers exclaim!

Projecting forward at just a conservative 100% of budget for the next three months he seems on track to bill around $442,500, about $27,000 ahead of his annual fee budget.

Fortunately KMSFeedBack Reports™ have always contained another very important panel of data regarding production that can be highly revealing, and of course very useful to managers.

In each month we draw down on data from the firms' records to show the new WIP value created by the team member in the financial year to date, factor in how many days of actual work were used to create it, and project forward for a full twelve months at the current Realisation Rate average of the individual team member.

Sadly, that projection for our Senior Associate "Billing Hero" is just $300,000 in fees billed in a full year from now, a whopping $115,000 below even his present budget!

Important to know...and interesting to understand why.

The fees for the current YTD have been heavily reliant on the existing pool of unbilled WIP, which has been gradually reducing...with inadequate new WIP being generated to replace it. Future fees simply cannot be sustained at the present billing level.

Whether that's because there isn't enough new work, or the team member isn't doing enough work, is for  management to investigate and address.

The bottom line...Billed fees and collected fees can be very misleading if viewed in relative isolation, yet that's something I still see firms doing virtually every week!

It can work both ways...work which legitimately has a lower velocity because of its type...Medical Negligence work is just one example, can mean that a very productive team member has no fees credits for quite a long period. A good means of projecting future billings is very useful...especially as a flow of bills starts and the average Realisation Rate can be determined.