Tracking your billable and nonbillable hours can illuminate firm (in)efficiencies.
Editor’snote : This article was originally published in Law Practice, May 2019, by the American Bar Association and is reproduced with permission.
By Laura Keeler
Legal professionals face a shortage of time. There is always more work that could be done in a day, but not enough hours to accomplish everything. Many professionals throw more hours at the problem instead of finding more efficient ways to manage their practices. According to the 2018 Clio Legal Trends Report, the utilization rate (i.e., the number of hours billed divided by the number of hours worked) for lawyers is only 30 percent. This means approximately one-third of the attorneys’ workday is spent on billable hours. Furthermore, the realization rate shows that only 81 percent of billable hours worked are invoiced, and the collection rate averages a mere 85 percent. Following those rates, American lawyers derive revenue from not quite 21 percent of their working time.
Attorneys can improve productivity by tracking how their time is spent. Making a habit of diligently tracking time will help capture the full extent of billable hours worked. Tracking categories of nonbillable hours can also help illuminate areas that are ripe for more efficient systems or outsourcing.
An Overview of Tracking Time
No one enjoys tracking their time in tenths of hours worked, but for legal professionals it’s a necessity. This is even true for firms that have alternate billing models as it provides benchmarks to assess whether the fixed-fee rate adequately correlates to the value of time and effort spent. But what’s the best method to track time?
Any time legal professionals bill must be accurate and in accordance with their jurisdiction’s ethical and professional rules. Accurate billing is best achieved by contemporaneous timekeeping. Practitioners should strive to capture time in the most efficient method. They should consider whether stand-alone time and billing/accounting systems or ones integrated with full-scale practice management solutions fit better for their practice. Either can improve efficiency, especially on generating bills sooner and collecting faster. Finally, attorneys must keep in mind that like any process in a law firm, each firm will customize its own set of systems and processes that work best for that office’s culture and practice areas.
Methods for Capturing Time
Both the amount of billable time and descriptions of billable tasks are recorded most accurately when they are billed contemporaneously with the task performed. If you try to reconstruct your billable tasks from memory later, you are apt to forget to enter components of the work performed. The longer you wait after the fact, the more time you lose. Be fair to the client as well as to yourself. If you put in a significant effort on a client’s behalf, note it down as soon as possible.
For practitioners who are accustomed to manually capturing their time on paper, some professionals write the details of the time spent, the client or matter and a description of the task on time sheets or in dedicated time-tracking notebooks. The details on the sheets are then subsequently entered into the billing database by the practitioner or another staff member. For practitioners who want to manually capture their time, they should avoid keeping details across multiple notebooks or Post-it notes, as they’ll waste time searching for the notes to bill.
A more direct method to record time is having individual timekeepers (e.g., lawyers, paralegals or limited license legal technicians) electronically input their time straight into billing systems. This avoids the duplication of writing out the details on paper and then transferring notes into the billing system later.
Some time and billing systems are freestanding programs. For example, TimeSolv, Time59 and Bill4Time offer time tracking, trust accounting features and LEDES invoicing in robust solutions. EBillity’s Time Tracker Legal may appeal to solos looking for ease and affordability. Tabs3 has a desktop-based program that can run customizable reports. Tali is a voice-based time-tracking application that can integrate with several programs.
Time and billing features are directly integrated with most law practice management solutions, such as Clio, MyCase, Rocket Matter and PracticePanther, among others. Legal technology is constantly evolving to add features that increase functionality and improve organizational management.
Time-saving Features in Billing Programs
Numerous features in time and billing systems provide efficiencies. Here are some highlights:
- Digital voice assistants allow users to log time entries and start or stop timers without needing to type on a keyboard. Considering that most people speak faster than they type, this can be a quick way to capture time when time is limited. Entries can be reviewed, edited and synced to client management systems.
- Automatic timers allow users to start and stop time rather than tracking time manually by looking at a clock. Some programs allow users to have multiple draft entries in the background so that they can switch back and forth quickly. Automatic time-tracking systems can run in the background on computers or mobile devices.
- Other helpful features include automated electronic bill reminders, integration with electronic payment processing services, billing systems that can handle multiple payment methods and currencies, client portals, client lead generation tracking, text expansion and provisions to make tracking fixed-fee matters simpler.
Whichever system is chosen, it’s useful to have a list of standard abbreviations and phrases for common tasks that the office performs. As a default, attorneys can also use codes, such as the ABA’s Uniform Task-Based Management Litigation Code Set. Having a list of standard abbreviations or codes also makes reviewing and editing prebills faster and easier as you will have more consistency.
Tracking Nonbillable Hours to Highlight (In)efficiencies
Tracking categories for nonbillable hours can illuminate areas that could benefit from increased efficiencies or be outsourced. This is particularly true for areas within billing and financials, marketing, firm organization and administration.
For firms spending a significant amount of time on billing and financials, lawyers could utilize technology systems and/or consultants that perform financial assistance for legal services, such as electronic payment processing software, law practice management software with built-in enhancements for time and billing, bookkeeping services that specialize in helping law firms or consultants who assist with generating bills and collections. It’s recommended that lawyers choose services that specialize in helping legal professionals and that those services comply with the rules of professional conduct.
Tracking nonbillable time can also illustrate the significant amount of time spent on marketing and business development. Legal professionals may find it’s a better use of time to outsource to services or consultants that handle firm website design, search engine optimization and internet marketing services. For example, attorneys should consider whether it would be a productive use of time to devote numerous hours to learning about websites and making websites look professional versus outsourcing and using that time for billable hours. Not every task related to running a practice is in an attorney’s wheelhouse, and that’s okay. Outsourcing nonbillable tasks to people who are highly proficient at what they do allows attorneys to concentrate on the areas in which they are more proficient, such as practicing law.
If tracking your time reveals that too much time is spent on firm organization and administration, upgrading to a more robust law practice management solution could help. Also, attorneys should determine whether clerical work is taking longer because office equipment, hardware and software are not functioning at capacity. You may be losing significant time if they’re freezing, jamming or causing work-arounds. The 2019 Solo and Small Firm Legal Technology Guide is a good resource for recommendations.
To free up administrative time, consider scheduling tools such as Calendly or FindTime, or subscribing to virtual receptionist firms. When contracting with each vendor, be sure to thoroughly vet the service and confirm its compliance with the rules of professional conduct, especially regarding conflicts and confidentiality.
Attorneys can benefit from incorporating time-tracking programs into their daily routines. Once legal professionals have a better sense of where the time in their day goes, both billable and nonbillable, they’ll be able to incorporate time-saving techniques to increase efficiencies in their firms.
Laura Keeler is the member services and law practice management coordinator at the New Hampshire Bar Association. LKeeler@nhbar.org
©2019. Published in Law Practice, May 2019, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.