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The success of a lawyer or law firm revolves around several principles: Client acquisition, case management, consistency, determination, and billable hours - the latter being specifically relevant. After all, what is the point of maximizing performance if you aren’t also maximizing revenue? The problem - many lawyers and law firms aren’t taking the appropriate steps to bill for time and work effectively.
The ABA Journal reports that during a 2016 Clio Cloud Conference, CEO Jack Newton stated that out of the 150,000 regular Clio users a shockingly low only 28% of a standard 8-hour workday was actually being billed for; Speaking in terms of revenue, that should be concerning to lawyers and law firms alike. In fact, it should be nothing short of frightening that law firms are missing out on so much opportunity for growth and profit. The work and time spent by lawyers and law firms to manage and solve problems and cases for clients is valuable and should be compensated as such.
So, how can lawyers maximize their billing time and increase profits?
Below, we’ll take a look at some expert industry advice, tips, and tricks that can skyrocket billing time success and ensure lawyers and law firms experience exponential financial growth. By enacting these processes, law firms and lawyers can gain the opportunity to dramatically increase profits and guarantee that the firm is poised for continued profit and growth.
Block billing is a common practice used by lawyers - and it doesn’t benefit the clients or billing lawyers. When this method of billing is enacted, it essentially places a large group of different tasks under one line of billing. Many lawyers see this as a quicker way to bill clients, but it actually sets them up to over or under bill; Clients also often see this billing practice as misleading, and courts often won’t allow it. A more effective method of billing time is itemizing each course of action taken; By doing this, attorneys can ensure each hour is billed correctly, and clients will appreciate the effort of transparency,
Lord Chesterfield once famously said, “Take care of the minutes and the hours will take care of themselves.” There isn’t a more accurate statement that applies to the importance of billing for every aspect of time spent working on cases within the legal field.
Too often, law firms and lawyers neglect to bill the small things; However, the fact is those small things add up - very quickly. Everything must be billed. For instance, if an attorney spends as little as 10 minutes speaking with a client, those minutes should be promptly billed for. At the end of each month, these small-time portions can quickly add up to hundreds, even thousands, of dollars.
Neglecting to promptly record time leads to inaccuracies in billing, which can cause problems for both clients and lawyers. No one can argue with the fact that the day of an attorney is a busy one; This often leads law professionals, who are pressed for time, to delay billing and opt to play catch up later. The practice of recording time at a later period can, unfortunately, lead to costly mistakes, including accidental under or overbilling.
To avoid these aforementioned time recording issues, lawyers and law firms should devise a time recording system that remains consistent and works with their unique schedules. Tracking minutes and hours throughout the day using a notebook, spreadsheet, or other recording device and compiling them for recording at the end of the day is one example of an effective method.
Implementation of minimum time increments within legal billing is the at of rounding time up to bill more effectively. This practice may be controversial, but it is legal.
The ABA states “In matters where the client has agreed to have the fee determined with reference to the time expended by the lawyer, a lawyer may not bill more time than she actually spends on a matter, except to the extent that she rounds up to minimum time periods (such as one-quarter or one-tenth of an hour).”
By utilizing this process, law firms can ensure every minute and second counts toward their bottom line.
Looking for more information on earning expectations for your legal practice? We have average earnings and salary reports broken down for you here.
As John Wooden once said, “It’s the little details that are vital. Little things make big things happen.”
Contributing effort towards maintaining and writing detailed descriptions of work performed during time billed is essential. When clients are given a thorough understanding of what they are being charged for, they’re less likely to contest payment and more likely to continue using the billing lawyer or law firm to perform services.
Note that while detailed billing descriptions are important, it’s also vital that key points are made briefly. Descriptions shouldn’t be lengthy and should give a brief synopsis of tasks that provide easy understanding and reading for clients. Writing useful descriptions takes practice, but is well worth the effort.
For billing and time tracking to be effectively maximized within a law firm, all attorneys and employees must adhere to the same procedures and protocols. When the time tracking system to be used is decided on, a written policy should be written and distributed. For this a company-wide billing policy to be successful, it’s important that employees are trained and that time tracking is being taught and mandated as a required daily task for attorneys.
Remaining competitive in terms of pricing is imperative for law firms; But, rates mustn’t be reduced to the point that lawyers and law firms aren’t able to effectively profit from their billing time. Basing pricing off current industry standards and averages can help ensure reasonable billing rates are maintained. Law firms should also take into consideration the value of their work when determining the price; While a competitor may be priced lower, a law firm with more experience and results will usually charge (and receive) more.
Because each client’s needs are different, it’s practically unavoidable that preset pricing will sometimes need to be adjusted or discounted. However, to remain profitable and to maximize billable time, lawyers and law firms should predetermine pricing bottom lines and define expectations.
As technology continues to advance, those in the legal industry must take advantage of the various tools that can help streamline, grow, and manage law firms; Time tracking software is one of these tools. Here’s how time tracking software can help maximize billing time for both lawyers and law firms:
There are free versions of time tracking software available for use within the legal space. However, if it’s determined that a paid version is needed, costs don’t typically exceed $5-$10 per user; This cost is usually determined to be reasonable, given that it can effectively assist law firms in increasing profits.
Several popular legal time tracking software options for law firms to consider are:
Customer relationship management (CRM) software can also help by providing a useful way for lawyers and law firms to manage client bases and tasks - effectively reducing time spent on routine, but necessary, tasks and allowing for more time to be spent on billable ones.
Popular CRM software options used by law firms include:
The range of cost for CRM software typically holds between $9-$50 per user. Depending on the size of the firm and the value of billable hours, this is a cost that may be worth it.
Gary Keller once said, “You can do two things at once, but you can’t focus effectively on two things at once.” This is a quote to remember when discussing the importance of delegation and non-micromanagement.
As with any company in any field of work, micromanagement of tasks must be avoided, and delegation is practiced. Lawyers should free up as much time conducting administrative functions as possible to focus instead on those tasks which are billable to clients. Practical use of the roles of admin professionals and paralegals within a law firm will prove vital to successfully billing for time by attorneys.
Every client encountered by a lawyer or law firm is going to come with a unique set of billing policies and expectations. While a law firm must adhere to its own guidelines, it’s also critical that client billing preferences and needs are taken into account. Client staffing structures and limitations, as well as budget needs and restrictions, can significantly impact how a client requires billing. By becoming familiar with a client's billing needs at the start, it’s easier for attorneys to ensure important needs and expectations are met. CRM software is a great way to track and maintain client requirements and preferences.
“The key is in not spending time, but in investing it.” Stephen R. Covey
Let’s face it - many things can distract or impede on tasks getting completed within a typical workday: minor problems and functions, social media, non-billable phone calls, emails, etc. By promoting a more strict focus during working hours on completing profitable items, law firms and employees can see a sharp uptick in the completion of tasks that are geared towards revenue generation.
Just because time spent conducting certain tasks within a law firm isn’t billable, doesn’t mean tracking these tasks doesn’t hold value. Each attorney, manager, and employee should regularly track time spent to complete goals and tasks; By doing this, it ensures that time can be spent proficiently. When doing this, law firms often find good or mismanaged time that can be reallocated to focus on more profitable tasks.
Not all tasks performed by attorneys daily result in billable time. Automating as many tasks as possible can reduce unnecessary time spent performing actions that don’t result in financial growth. Some ways in which lawyers and law firms may consider automation are:
Come the end of the day, and with the closing of each fiscal quarter, it can be said that the maximization of billing time is the essence of every successful lawyer and law firm. By utilizing the tips above, and by remaining consistent, firms and legal professionals can ensure the increase and maintenance of profits essential to growing the business.
Let's face it, downtime, hiccups and technical challenges are unavoidable in every business and they can be frustrating and downright costly.