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Strategy Brief: Do You Charge for Thinking?

Posted on March 7, 2013 by smartwebparts

toddgerstein.
Todd Gerstein
CEO & Founder
Smart WebParts

Go back to your office and think. That’s what my first boss told me when I started at Milbank Tweed in 1978. I was the firm’s first Director of Finance, it was law firm management in the Stone Age and there was very little, if any, precedent to follow. So, thinking was important.

His simple directive stuck with me throughout my career. Go to your office and think. Be creative. Look at the problem from different angles. Bat the issue around. After all, isn’t this why we spend so many years in school, in professional development, in retreats and conferences? To develop our minds? To solve problems? In other words, to learn how to think.

Billing for Thinking

But, what about attorneys? Everyone says you go to law school to learn how to think. But in the course of our research at Smart WebParts, we have run scans on millions of time entries to study timekeeping behavior, and it is amazingly rare to see a time entry that says something like, “think about the client’s problem.” Instead, today it’s all about action verbs: Prepare. Analyze. Research. But never: Think.

There’s no phase task code for thinking, but why not? Why shouldn’t “thinking” be given its own space in the billing universe, which would allow for honest reporting of time spent thinking? Why have we gotten to a place where attorneys are afraid to report time thinking and clients might see “thinking” as a red flag?

To dig deeper and uncover the causes for this, I posted a question on a few LinkedIn professional groups asking: “Do you charge clients for thinking time?” and I got some interesting responses.

One attorney had this to say:

“Not all my time spent on behalf of clients is “doing.” Some of it is “just thinking” — while sitting at a computer keyboard, pacing the hallways, or simply staring off into space. I don’t charge for travel time, but a lot of my travel time is also “thinking time.” (If I’m asleep on a plane or in a hotel room, my meter is not running.) Daydreaming afterwards about brilliant arguments that I ought to have made doesn’t count. But when I’m making sustained efforts to plan, compose, and rehearse brilliant arguments in preparation for actually making them on a client’s behalf, and when I am confident that my client has gotten good value for the time I’ve invested in this sort of “just thinking,” I will indeed bill for it. You ought not want a lawyer who’s incapable of — or resistant to, or even just under-acquainted with — reflective thought and planning. While thinking on one’s feet in a crisis is indeed a necessary skill for courtroom lawyers, it’s by no means a sufficient one. No plan survives first contact with the enemy; and thus, as Gen. Dwight Eisenhower explained, “Plans are useless, but planning is invaluable.”

And here’s another’s take:

“I’m a little reluctant to charge a client thinking time unless I’m solving an extremely unique problem for them. If I’m “thinking” because it’s new ground, then I might charge some of that time. Most of the time I just chalk it up to professional growth, especially if the solution I come up with may prove useful for other projects in the future.”

In response to that comment came this one:

“I disagree. I call this analysis and I consider that thinking about the issues my client’s problem raises and how to resolve them, including reviewing the facts and how the existing caselaw and other precedents, including my own experience, might predict a particular outcome, to be an essential “value added” element of my representation. To me, drafting or negotiating without first analyzing the situation and planning strategies on how to handle the challenges, both foreseen and unforeseeable, in my client’s situation is like heading to a new place without a roadmap — I can’t get “there” (successful resolution of my client’s issue) unless I know my preferred and alternate routes.”

Conclusion

Whether admitted on a bill, attorneys do think when they’re on the clock. What an attorney wants to do with that time, bill-wise, is an individual choice. Some will want to be forthright and explain time spent thinking, while others would rather explain thinking time using alternate terms.

In any case, thinking, whatever it’s called, is time well spent. On that, clients and attorneys can agree. No one wants a thoughtless attorney. Now if only we could agree on how to bill for it.

Filed under: Insight, Strategy Brief, Timekeeping | Leave a Comment »

Strategy Brief: No More Excuses: Making Timekeeping Compliance Non-Negotiable

Posted on February 25, 2013 by smartwebparts

toddgerstein.
Todd Gerstein
CEO & Founder
Smart WebParts

Before I lay out my five-point plan to fix compliance, let’s look at the most common excuses. Not surprisingly, timekeeping excuses cut right to the pain and angst of the problem.

Excuses, Excuses…

For attorneys, timekeeping is hard because:

  • Keeping time is unnatural. Who thinks of their day in six-minute increments? No one, that’s who. It can seem like pure absurdity to have to track and enter every task one does in a workday.
  • I want to practice law. Attorneys want to practice law, not justify their day to the client and/or the firm, even though they know their law firm is a business.
  • It breaks my rhythm. The process requires a kind of meta-attention that few people possess. It requires the awareness to know that you need to stop your primary task so that you can do the secondary timekeeping task. It interrupts the natural flow of work and creates a distraction that is hard to recover from. .

Attorneys aren’t just making up excuses. There are legitimate reasons why it is hard to keep time. It’s not that these reasons don’t exist; it’s that they can’t matter.

Once you’ve given them the equivalent of a hug and a “there, there,” it’s time to remind them: Yes, your excuses are legitimate, but you are an attorney and this is a business and so…they can’t matter. Nothing can get in the way of timely, accurate timekeeping.

The Plan: Make Timekeeping Non-Negotiable

But how, you ask?

We know, from our research and discussions with firms, that the firms with the greatest success in timekeeping create a culture of compliance. They do so by keeping expectations about timekeeping non-negotiable, consistent and clear. They also include incentives and/or penalties for enforcement.

What steps can you take to emulate the firms with successful timekeeping cultures?

  1. Policy. You must have a firmwide policy that outlines the rules everyone must follow for time entry processes. Daily by 10 a.m. or every Monday for the preceding week, for example.
  2. Provide the best tools and technology. Make sure you have an up-to-date timekeeping system that includes time capture, time entry and mobility wrapped up into one software package.
  3. Partners. Partners can’t play by different rules. Even if they have secretaries who help out with time entries, they must lead on this issue.
  4. Problem attorneys. Don’t ignore the attorneys who feel that they can get away with flouting the policy. Have the partners take swift action to deal with these folks, so that everyone is aware that non-compliance won’t be tolerated.
  5. Penalties. The punishment we’ve uncovered that works best for firms seems to be penalties that affect an attorney’s year-end review. Include timekeeping skills in the attorney’s assessment.

An End to the Excuses…

Timesheet compliance can sometimes seem like a battle not worth fighting, especially when your best attorneys offer up such convincing reasons why it is difficult for them to keep time. But fixing your compliance issues is imperative, and, as you’ve seen, actually fairly straightforward. All it takes is a commitment from firm leadership to make the culture of compliance a reality.

And, if enthusiasm for establishing the culture wanes, remember: When attorneys make excuses about timekeeping, firms lose money. It’s that simple. While it’s not easy to get attorneys to comply, it is also very simple: Do it. No excuses. (You might also remind them that timekeeping is part and parcel of being an attorney!)

Support compliance using the plan outlined above, and you’ll have happier attorneys, less revenue leakage, and maybe best of all, an end to the excuses.

Filed under: Strategy Brief, Timekeeping | Leave a Comment »

Smart WebParts Widens Global Reach with Smart Time Version 3.15 Release

Posted on January 22, 2013 by smartwebparts

Improvements encompass global language functions, smartphone call history and the administrative dashboard.

San Francisco, CA – January 23, 2013 - Smart WebParts (www.smartwebparts.com), the innovative leader in timekeeping software, today announced the availability of Smart Time Version 3.15, with three key functionalities better aligned to meet global, mobile and administrative needs.

“We’re bringing Smart Time to an even wider audience with improvements to the software’s language capabilities,” said Todd Gerstein, CEO and founder of Smart WebParts. “And, administrators of Smart Time will find it ever easier to adopt thanks to new dashboard features that simplify use.”

Global users will now have access to a language skin, which customizes the user interface, multiple language dictionaries for spell checking, and Unicode support for 48 different languages, including English, French, Spanish and Chinese.

Additionally, both Android and iPhone call histories can be secured for the Smart Time time capture engine. For Android, it’s an applet for the smartphone that emails the call history to Smart Time for processing. For iPhone, it’s a utility that backs up call history. And, as always, Smart Time supports BlackBerry devices via a BES Connector.

Finally, administrators of Smart Time will be glad to find new functions that allow easier management of the application, users, accounting integration and data store connectors.

About Smart WebParts

Smart WebParts, LLC (www.smartwebparts.com) provides innovative software solutions designed to help law firms maximize profits. The team consists of experts in finance, accounting, technology and software. Leveraging this expertise, Smart WebParts employs proven, best-of-breed technologies, tools and production processes, and innovates and creates new tools when necessary. Smart WebParts is a privately held company headquartered in Los Gatos, California with an office in London serving the EMEA market.

Filed under: Smart Time, Smart WebParts, Timekeeping | Leave a Comment »

Block Billing by Law Firms Costs Clients Millions in Just Three Lawsuits

Posted on January 7, 2013 by smartwebparts

Grant%20Bio%20PhotoGrant D. Stiefel, Esq.
Litigation Limited
Special Guest Post

In August 2012, three different courts issued rulings which hold that vague, block billed time entries—which have long been the bread-and-butter of most law firms—just aren’t a very accurate or reliable reflection of how much time those law firms actually spend working on the clients’ behalf.  This article by Litigation Limited (http://litigationlimited.com/) summarizes these three decisions and considers their import for clients and corporate counsel who have not yet adopted outside counsel billing guidelines that prohibit block billing.

In Payan v. Nash Finch Co., Case No. 11CA0570 (Co. App. 2012), the Colorado Court of Appeals noted that “across-the-board percentage cuts are routinely employed by courts to remedy… block billing” and cited to a Ninth Circuit decision and California State Bar study which found that “block billing resulted in a 10% to 30% increase in time shown in billing statements.”

In The Walman Optical Company v. Quest Optical, Inc., No. 11-CV-0096 (D. Minn. 2012), the Court ordered attorneys’ fees as sanctions for defendant Quest’s misconduct during discovery and asked plaintiff Walman to submit a fee petition and billing statements. However, after being presented with vague, block-billed time entries, the clearly infuriated Court slashed Walman’s fee request by more than 85 percent: “Due to [counsel’s] practice of block-billing – that is, billing multiple tasks under a single time entry – it is impossible for the Court to determine how much time [the lawyers] spent on specific tasks.”

Finally, in Yelton, et. al. v. PHI, Inc., et. al., Civ. Action No. 09-3144 (E.D. La., Aug. 14, 2012). , a Louisiana federal district court rejected approximately $1.5 million (or 75 percent) of a party’s $2 million request for attorney fees and expert witness costs because the law firm’s time entries were “vague, block billed and irrelevant.”

What’s really interesting is that none of these disputes involved a contractual provision or statute that would have obviously awarded attorneys’ fees award to a prevailing party.  Instead, the courts awarded fees and costs as a sanction for the opposing party’s misconduct during litigation… which means that every lawsuit or arbitration holds the potential for a significant award of costs and attorneys’ fees.  However, because each of the clients in these cases permitted their lawyers to bill using vague, block-billed time entries, the fee awards were ultimately slashed by 57 percent, 75 percent and 85 percent, respectively.

While it’s well-known that clients who allow block billing pay a 10-30 percent premium over those clients who have outside counsel billing guidelines that prohibit the practice, these cases show that there are other reasons to prohibit block billing.

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Grant D. Stiefel is the founder and president of Litigation Limited, an experienced trial lawyer, and a consulting and testifying expert on legal billing issues.  He personally managed a large litigation portfolio for the world’s fifth-largest law firm, K&L Gates, and has served as national coordinating counsel for several major corporations. He is also a trained attorney-client fee arbitrator, a certified MCLE instructor on legal billing practices and ethics, and helps clients of all sizes identify and eliminate billable hour inflation.  He can be reached at grant@litigationlimited.com or his website, www.litigationlimited.com.

Filed under: Insight, Interviews, Timekeeping | Leave a Comment »

Billable Time?

Posted on November 26, 2012 by smartwebparts

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Steven B. Levy
Lexician
Special Guest Post

I’m often asked my opinion on whether time spent managing projects is billable.

My quick answer is, Billable time is what you and the client agree is billable.

That, of course, isn’t the most helpful answer, and I offer that answer with a smile.

Then I go into the specifics of working through this issue.

Obviously, this topic makes sense only in an hourly billing arrangement. (It’s yet another good reason for both clients and firms to consider alternatives to hourly billing.)

Consultant Tony Reiss posted an interesting quiz on billable time today, adapted from Robert Mowbray’s work (Taylor Mowbray LLP). You might want to take the quiz before continuing here.

You don’t have to agree with his suggested answers, by the way. (I think clients will disagree with half of them, but they are interesting and difficult questions open to numerous interpretations and, yes, negotiation with the client.)

I think this quiz sheds light on whether LPM time is billable. Perhaps the best way to approach the issue (beyond discussions with the client) is to look at two questions:

  1. How much of the less-than-organized time that you spend managing projects today do you bill?
  2. Should you bill the client for time spent reducing the overall bill (efficiency)?

Billing for Efficiency

Today, what is your firm’s policy on billing matter-related tasks that are not, strictly speaking, “lawyer work” such as preparing documents, research, offering advice, and so on? If you do not bill any of that time today, it’s unlikely you’ll bill for it using LPM. However, most firms do bill for significant amounts of this time. After all, it’s required in order to serve this particular client on this particular matter.

Consider treating project management the same way. Bill LPM tasks that address the client’s matter specifically, such as developing a project charter. You’re going to do the work required for a charter whether you prepare one overtly or not. You’ll ask the same questions, look for the same answers. The difference is that under LPM you’ll do so in a more organized, thoughtful, and efficient manner. You’ll be saving the client money compared to what you would have billed, because these tasks take less time. (It may not be obvious they take less time because you may be calling out tasks that previously you lumped into the great hard-to-define mush of billable six-minute increments, but that’s a different issue.)

Here’s another example: You give an assignment using the precepts I teach in my seminars and classes. It takes you ten minutes (times two people) to properly give the assignment. Billable? I think so. If you do it “the old way,” you might spend only five minutes (times two people), if that much. However, what about all the extra time you’ll spend during the course of the assignment offering clarification, looking for avoidable errors, doing work that wasn’t truly on point, and so on? That will add up to far more than the additional few minutes to give the assignment correctly. Even if you write off rather than bill work that missed the mark (which is a significant issue for the firm), your total billable time will generally be considerably more than if you had given the assignment optimally in the first place.

On the other hand, tasks or parts of tasks that relate to firm growth might not be billable. For example, the project debrief (a/k/a after-action review) at the conclusion of the matter relates to firm and professional growth rather than the specific matter. What you learn will benefit clients in the long run, but it won’t really affect the matter just completed. Thus it’s probably not billable. However, what you learn will make you more effective and efficient going forward, so there should be some line in the internal ledger against which you mark the time spent.

Do Clients Use Project Management?

It’s also worth considering whether the clients use PM in producing whatever it is they make. (Please don’t confuse what passes for PM in IT projects with PM in their engineering divisions. Clients whose only encounter with project management is the to-them incomprehensible and absurd demands of too many IT teams are not going to be favorably disposed toward hearing about your own project management. If IT has poisoned the well, you’ll have to work extra hard to find a clean water supply.)

Corporations with industrial processes are usually big on project management – pharmaceuticals, aerospace, manufacturing, etc. They get it, and are likely to be pleased that you get it too. They understand that paying a little for project management saves them a lot down the road. That’s not going to stop many of them from trying to negotiate it out of the bill – that’s their job as a customer (client), to get the best price possible relative to the quality of work they’re looking for. That doesn’t mean you need to take their negotiating stance at face value.

Bottom line – if you’re adding value to the client and for the client, you should be compensated for that work. Reasonable clients will consider that fair.

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Steven B. Levy, the author of Legal Project Management and The Off Switch, teaches classes and seminars to law firms, law departments, and government agencies around the world. Steven can be reaached at steven.levy@lusyx.com

Filed under: Insight, Timekeeping | Leave a Comment »

Take the Time Recording Challenge

Posted on November 19, 2012 by smartwebparts

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Tony Reiss
Founding Principal, Sherwood PSF Consulting
Special Guest Post

You can’t bill what you don’t record! Most firms recognise that the largest source of leakage of chargeable time is the time that should have been recorded but wasn’t.

Take this test to see what you would record. The answers aren’t straightforward. Discuss your answers with your colleagues. Agree on a policy. I’ve tried this test with firms and it has helped. I have some suggested answers at the end of the article.

Now, it is your turn to take the quiz.

1.  You spend an hour with a partner putting together a quote for a matter.

Do you:

(a) Each record one hour chargeable time

(b) Record no chargeable time yourself but let the partner record one hour chargeable time

(c) Neither of you record the time as chargeable

(d) None of the above

2.  The first meeting on the matter is at the client’s offices. You travel there directly from home. This takes you 30 minutes longer than your usual journey to work.

Do you:

(a) Not record anything

(b) Record the full time of your journey chargeable time

(c) Record the 30 minutes extra chargeable time

(d) None of the above

3.  You spend 10 minutes briefing a junior lawyer about some research you want her to do. She spends 3 hours doing the research and does not find an answer to the point. You do 30 minutes of research yourself and find the answer. You then spend 20 minutes with the junior lawyer talking about the answer and giving some general advice about how to research effectively.

Do you:

(a) Record 30 minutes chargeable time

(b) Record 40 minutes chargeable time

(c) Record 1 hour chargeable time

(d) None of the above

4.   At the end of the day, you tidy your office. This takes 20 minutes of which 10 minutes is spent organising and filing papers relating to the matter.

Do you:

(a) Record 10 minutes to the matter and 10 minutes as management time

(b) Record 20 minutes as management time

(c) Not record any time

(d) None of the above

5.   A week later, you meet the client for lunch. The journey to and from the restaurant takes 30 minutes. Lunch takes 60 minutes of which 20 minutes is spent talking about the matter, the remaining 40 exchanging general news about the client and the firm.

Do you:

(a) Record 90 minutes chargeable time (and make sure client pays for the meal)

(b) Record 50 minutes chargeable time and 40 minutes marketing time

(c) Record 20 minutes chargeable time

(d) None of the above

6.   You attend a client meeting, in your offices, with the matter partner and an IP lawyer. You do not participate in the meeting, which lasts for one hour.

Do you:

(a) Do not record the meeting as chargeable (but put it under another category)

(b) Record 60 minutes chargeable time

(c) Do not record the time at all

(d) None of the above

7.   At a training meeting, a colleague talks about an issue that is directly relevant to the matter on which you are working. Your colleague took two hours to research the issue. The result is that you now only have to spend 15 minutes to research the issue, rather than 2 hours 15 minutes.

Do you:

(a) Record 15 minutes chargeable time yourself and persuade your colleague to record 2 hours to the matter

(b) Record 15 minutes plus the time spent in training as chargeable time

(c) Record only 15 minutes chargeable time

(d) None of the above

8.   The junior lawyer working with you asks you how she is progressing on the matter. You spend 30 minutes with her, giving general feedback on her performance, the majority of which relates to tasks she has performed on the matter.

Do you:

(a) Record 30 minutes chargeable time to the matter

(b) Record just under 30 minutes chargeable time to the matter

(c) Record the time as management time

(d) None of the above

9.   The client calls you to provide some facts that will be included in a document you are drafting. The telephone call lasts for 2 minutes.

Do you:

(a) Not bother to record the time at all

(b) Record 2 minutes chargeable time

(c) Record the time as chargeable time and round up to the nearest time recording unit (e.g. 6 minutes)

(d) None of the above

10.   You complete the matter. You and the matter partner have a lunch meeting with the client to discuss the firm’s performance.

Do you:

(a) Record the meeting as chargeable time (and imatterly persuade the client to pay)

(b) Record the meeting as investment time (i.e. marketing)

(c) Do not record the meeting

(d) None of the above

ANSWERS: How did you get on? Some of them are quite tricky aren’t they? Here are my suggested answers:

1.    (a)
2.    (c)
3.    (c)
4.    (a)
5.    (b)
6.    (b)
7.    (c)
8.    (a)
9.    (c)
10.  (b)

Note: I’m grateful to Robert Mowbray of Taylor Mowbray LLP for designing the original version of this quiz and allowing me to use it. Please contact Robert at rmowbray@taylormowbray.com

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Tony Reiss has 20 years’ experience assisting partners to become more effective leaders and develop more profitable business from stronger client relationships. He is a qualified Master Coach and accredited to use the MBTI psychometric indicator.

He was a Principal Tutor on the MBA in Legal Practice at the Nottingham Law School for several years and is currently a tutor on the IE Law School Management Programme in Madrid and London.

He speaks regularly at international conferences and is author of The BD Handbook for Lawyers – Prospects to Advocates.

Tony is a Founding Principal of Sherwood PSF Consulting. He has consulted international firms across Europe, North and South America, Africa and South East Asia.  He can be contacted at tonyreiss1@gmail.com and his blog is http://tonyreiss.com

Filed under: Interviews, Timekeeping | Leave a Comment »

Timekeeping Q&A with Todd Gerstein: How Time Capture Increases Revenue

Posted on October 22, 2012 by smartwebparts

Todd Gerstein
CEO & Founder, Smart WebParts

If your firm relies on booked hours for billing, it’s virtually guaranteed that your firm is also losing revenue to “leaked time,” which is time worked but not booked.

The good news is that you can plug these leaks with a time capture system: a low-risk, low-investment and highly effective option. And, not only does time capture find these lost hours, but it also helps to improve management of the entire timekeeping process.

Q: How does leaked time happen?

A: In our experience, the biggest sources of leaked time are obvious, but without time capture, hard to fix:

  • Small units of time the timekeeper simply forgets about
  • Work that the timekeeper underreports

As we delve deeper, we see that these sources occur most often in these very common work situations:

  • Emails
  • Mobile phone calls
  • Internal phone calls from colleagues
  • Time in the office when particularly busy
  • On a smartphone, but out of the office
  • Out of the office all day
  • Work that takes place in very small increments

Q: Who leaks time?

A: You’d think that there would be “good” timekeepers and “bad” timekeepers, but it’s not quite that simple. Even the best timekeeper encounters situations that thwart timely and accurate entries.

Really, it’s more a question of timekeeping “style.” Timekeepers who keep time as they go—the “contemporaneous” approach—are less likely to leak time, but still do so despite their best efforts.

Timekeepers who enter time after work is done—the “reconstructionist” approach—leak more time, with the problem worsening the longer the delay between the entry and the time worked.

Q: What is the revenue impact of leaked time?

A: Take a look at the chart below to see the magnitude of the problem:

With a time capture system, it’s very reasonable to expect to find an additional 4 to 6 hours per timekeeper per month. So, 5 hours per month for a timekeeper with a $400/hour rate yields an additional $24,000.

For a 100-timekeeper firm, closing the leak represents $2.4 million in incremental billings. This represents about a 3% pickup in booked time over the course of a year.  (Thats a 60 hours picked up on 1800 hours.)

Revenue Up, Angst Down

Firms must actively manage their timekeeping process if they are to maximize profits. With the potential for significant revenue increases for most firms, and a simple implementation process and reasonable cost, the case for trying time capture is a compelling one.

Since the billable hour was invented, two things have existed: 1) leaked time, and 2) timekeeping headaches. Time capture helps to preserve the integrity of the billable hour, plugging leaks and making timekeeping as accurate and painless as possible.

Filed under: Interviews, Strategy Brief, Time Capture | Leave a Comment »

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