How important is time recording?
Law firms will tend to charge their clients in 4 ways:
Hourly rates
Fixed fees
Capped fees
Contingency fees (Damaged Based Agreements)
Firms will approach time recording in a manner of different ways, for example, not recording time at all, recording only chargeable time or recording all time both chargeable and non-chargeable. The question is, which approach is correct?
Time recording has been a tradition in law firms and borne out of the method of charging clients by the hour for the work that is undertaken on their behalf. As time has passed and the other methods of charging clients have emerged, in some firms, the tradition of time recording has eroded or disappeared whereas in most, time recording is still undertaken. However, as an industry time recording is and should be second nature and for more reasons than simply to raise a bill to a client.
Effective time recording offers firms a significant degree of insight into their firm, to name a few:
How work is processed and how efficiently tasks or work is undertaken
The behaviours of their staff
The resources the firm uses and needs to perform its service delivery
A firm that does not time record, or does not time record properly is disadvantaged in what is a very competitive market place. Although, a firm that does not time record can look to their P&L to establish profitability, how much further can they delve into the business to establish how and where they can improve their processes to deliver improved profitability and stability?
Time recording should not be seen as a burden or a chore. Embracing an effective time recording strategy across your firm will bring benefits other than simply financial. For example: –
It will reveal how efficient the firm is at processing work – from an individual, through to departments and the firm as a whole, a picture will be built of how work is processed and where the firm is efficient or inefficient. It can provide the information needed to assess why certain issues arise and help arrive at the solution to resolve them.
Whether a firm is working to fixed fees, capped fees or hourly rates, understanding the time being spent on a file will enable assessment of the appropriate charging rates for a particular type of work which in turn can drive behaviours of the staff and management.
Firms can audit and assess the work actually done to ensure that clients are billed correctly or fixed fees are adjusted as appropriate.
Using information from past cases can assist in setting quotations for future work.
It will be possible to understand in detail the input of the staff and the work they performed and also highlight those staff who outsource work and if this is at a level the firm can accept.
The information provided by time recording will enable the firm to take snapshots of time to consider its resources and use this information to project future resourcing needs and issues.
The firm can identify when additional resource is needed from a factual base rather than making assumptions and can plan rather than be reactive.
Because each time entry has a description of the work done or should have, managers can turn to the time recording entries for audit purposes saving time in auditing matters and directing audits to potential problems making more effective use of management time.
The truth is, there are a host of reasons that more than justify the benefits of effective and consistent time recording and why firms should embrace time recording regardless of how they set and charge their clients for the services delivered.
If you are convinced that time recording is essential for law firms then how can it be achieved properly and consistently?
The answer can be found in RevenueManager a simple and effective software solution that drives effective time recording behaviours across a firm.
Revenue Manager is an application that engages with your time recording system and monitors fee earner activity. It reminds and alerts fee earners that their time recording has not been entered onto your chosen case management system enabling them to enter their time recording. If fee earners still fail to complete their time recording data, then the system will provide escalating warnings and override other applications so compelling fee earners to submit their data.
