Billable Hours: Strategy and outcomes for full time recording...Articles Archive

November 1998 page 47

Billable Hours: Strategy and outcomes for full time recording

By Rob Knowsley

Rob Knowsley has been a practising solicitor and, since 1988, has been engaged exclusively in consulting in the legal profession.

FAR TOO MANY SOLICITORS FIND THAT THE ONLY way they can produce decent revenues is by working unacceptably long hours with the consequent loss in quality of life.

This is a mistake, based, in my opinion, on a fundamental flaw in the traditional method of looking at solicitor productivity which seems to be that a firm expects a solicitor to achieve a certain number of billable hours. The solicitor is then expected to work whatever hours are needed to achieve the billable hours stipulated.

The problem with this is that if the solicitor is inefficient, or the firm's support structure is inadequate, excessive total hours need to be invested by that solicitor, leading to burnout, general discontent and, ironically, often poor profits!

I prefer to work from the opposite end. I ask solicitors how long they are prepared to work in total, on average, throughout the total number of weeks for which they are being paid. If, for example, a solicitor is prepared to work on average 45 hours per week, this is nine hours on an average day, or at least 90 six-minute units of time-recording of either client or firm time.

My system recognises that there are things solicitors need to do to ensure that a firm has clients in the long term, and that the solicitor is increasingly competent to look after those clients' problems and increasingly skilled in using the firm's resources efficiently in servicing those clients' needs.

These activities are categorised under `firm time' and include training, non-chargeable research, precedent development, marketing etc. If a firm considers these things important, it should budget for them, both in time and money. The time should be allocated from the total day that each solicitor is willing to work on average.

So in order to work out a reasonable number of client hours, you need to first allocate a reasonable amount of firm time needed by each solicitor, and then monitor what actually happens so that adjustments can be made.

The potential value of work-in-progress created by each solicitor will be a multiplication of the number of units of client time available by the appropriate hourly rate, less or plus an allowance for a realisation rate achievable in fact by that solicitor.

A classic example would be a solicitor working in personal injury who has numerous opportunities to perfectly properly charge above time-recording levels. Efficient solicitors working in family law without much Legal Aid will generally achieve from 90 to 100 per cent realisation on their raw work-in-progress recorded, based on the statistics I have from numerous firms throughout Australia.

There is a catch to this system. To get optimum results, every person working on client files must fully time-record every piece of activity carried out during the day, whether client time or firm time. There is no point planning time in two categories and then only recording it in one.

Not recording firm time accurately robs the firm of the opportunity to assess how effectively firm time has been spent.

It has been my experience that solicitors who choose only to record client time finish up recording less client time than they actually spend. Further, a system that does not involve the discipline of recording everything allows - even encourages - solicitors to elect what they will and will not record to a client file, usually because they perceive that it will not be charged to the client in fees.

Failing to record everything done on a client file reduces the apparent work-in-progress on the file, and automatically increases the realisation rate of the solicitor and other people working on the file when the bill is prepared. This makes the solicitor look more effective and, in the absence of complete data, it is not easy to show that solicitor how to be much more effective operating with improved techniques.

I have found that solicitors who do not fully time-record tend to overestimate the total time they actually spend working. By far the majority of solicitors who produce less than their talents and time invested would warrant are solicitors who are not prepared to undergo the discipline of full time-recording.