There
is a wide range of challenges out there, but, in my considered opinion,
valueless time is the biggest challenge that small-medium law firms face by
far…
LinkedIn
member Joe Reevy made a comment about valueless time in a fixed fees discussion
in mid-2014, in the LinkedIn Discussion Group “Successful Small Law Firms”.
Joe
stressed that there is still way too much valueless time paid for by law firms,
saying in summary, “Identify and squeeze out as much as possible”.
It
really grabbed my interest because it has been a passion of mine for over
thirty years.
So,
at the outset, what does “valueless time” encompass? It’s certainly
wide-ranging and pernicious!
i)
Time recorded to a client matter that is for whatever reason not
recoverable…
ii)
Time recorded as being invested in FirmTime™ but having no value to the
business…
iii)
Time paid for by the business but not worked, or recorded, for the
business at all…
iv)
Time, especially ClientTime™, worked for the business, and potentially
valuable, but never recorded at all…
v)
Time invested in FirmTime™ by someone when it could clearly have been
delegated to someone with suitable skills and a much lower opportunity value to
the practice…
vi)
Time recorded by people as ClientTime™ or FirmTime™ that was never
worked…what one of my very long-standing clients delightfully calls, “Spaghetti
recording”…
vii)
There are no doubt others, and I’d love to hear your own contributions…
What
“valueless time” is not about
is a debate about whether law firms should bill clients by the hour!
It
should go without saying that private time is not valueless time, quite the
contrary. One important goal of a successful law firm should be to make sure
that Principals and other team members have ample private time, and every
opportunity for as much of time that to be quality time as possible.
What
the truly successful law firm needs to do is to ensure that as much of what it
is paying for as possible, ClientTime™ and FirmTime™, gets used in the practice
in a valuable way.
Most
law firms have always been genuinely interested in making sure they don’t try
to palm off varieties of valueless time to their clients in inappropriate
bills, but lots more people than clients
potentially pay for valueless time in your firm.
All
law firm stakeholders are affected: Principals; Professional and Support staff
in terms of remuneration and career development; under-used service providers;
families relying on less than optimum income streams…the list goes on.
Most
small-medium law firms have modest to non-existent real profits after allowing
for Principals’ notional or actual salaries.
It
is therefore a key obligation of management to improve time effectiveness in
that huge zone between present time use creating break-even (or not much
better), and time use that could enable at worst, significant improvement, and
at best, optimal performance…and hugely improved profits!
While
of course it’s never all just about money, Joe Reevey and I are in “furious
agreement” that our experiences over many years have shown us that very profitable practices are almost always much happier than
unprofitable ones.
Ten key enemies of the
minimisation of valueless time:
1. A
real failure to appreciate the huge impact of better use of time on revenue
improvement beyond break-even…
2. Poor
marketing by law firms leading to insufficient client file work for many
employees…a regular absence of my “healthy backlog”…
3. Back-to-front
thinking in setting billable hour goals for employees…both necessary and
valuable FirmTime™ needs should be examined first…
4. A
failure to regard FirmTime™ investment and effective utilisation as at least as
important as ClientTime™, and often more so...
5. Management
not having much idea how to really tap into the innate desire of most employees
to be gainfully busy and look after clients well…
6. Treatment
of employees with a broad-brush in setting production goals, rather than as
true individuals with different skills, interests, and potential contributions
to the firm’s Business Plan…
7. A
lack of willingness by some Principals to be genuinely accountable that can
translate through suppressed guilt to having no “stomach” for requiring their
team members to be fully accountable either…despite the serious consequences…
8. A
predominance of Principals with too much to do to realise the dramatic impact
employee valueless time is having on the bottom line, and health of the
business…or if they are aware, too much to do to make time to step back and
find out how to fix it, and what the immediate upsides will be for all
concerned…
9. A
continuation in too many cases of the central importance of personal billed
fees “scores” in the culture/power structure of the firm…
10. Insufficient
quality time allocated by Principals, and others in supervisory roles, in their
own WorkPlans™, to train, mentor and manage staff…
What
many seem not to realise is that the defeat can be realised with quite basic,
sound, consistent, and people-friendly, systems and approaches…
The
degree to which all stakeholders will benefit can be mind-blowing.
Perhaps
therein lies the root cause of the problem for so many firms, and the barrier
to most escaping from relative “poverty”?
Are
too many Principals convinced that the answers cannot be so easy, or, as
genuine and intelligent professionals, "We surely would have been able to
nail everything down properly well before now"?
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