Timekeeping is Broken in Most Law Firms

toddgersteinTodd Gerstein
CEO & Founder, Smart WebParts

Let’s get right to it. Everybody hates timekeeping – attorneys and admin staff alike. I can’t sugar coat it. It is a major cause of angst at most law firms. And, it has been out of control for a long time.  

And it shouldn’t surprise you that attorneys tell us it’s getting harder and harder. Why? Technology.  

Technology has changed the way we work. Most attorneys have turned in hyper multi-taskers jumping back and forth between emails, phone calls, meetings and documents all day long. Who can possibly keep it all straight in 6 minute increments?  Especially if you don’t do your timesheets every day.

I’m not telling you anything you don’t know. Timekeeping is broken in most law firms.

We have a solution to the problem – Smart Time. Smart Time is an intuitive time entry and time capture software program that gives timekeepers perfect recall, enabling them to prepare complete and accurate timesheets. We have a desktop version that runs in a browser and native versions for iOS and Android devices. Smart Time is compatible with Aderant, Elite, LexisNexis, Microsoft and other leading accounting systems.

Please take a minute to watch our video to learn how Smart Time can maximize profitability by boosting billable hours.

Take a look and then contact us to discover how Smart Time can help you.

 

 

 

Pellerano & Herrera Live on Smart Time to Improve Attorney Time Capture and Recording

Firm Implements Time Entry, Time Capture and Mobile Modules

Campbell, CA — February 26, 2014 – Smart WebParts (www.smartwebparts.com), provider of the most advanced timekeeping software platform, today announced that Pellerano & Herrera, the leading law firm in the Dominican Republic, has gone live with Smart Time to improve attorney time recording.

“Earlier this year, we undertook the initiative to improve timekeeping. Our old system was functionally weak by today’s standards. It was not meeting the needs of our attorneys,” said Alejandro Flaviá, IT Director of Pellerano & Herrera. “We reviewed several timekeeping software products and quickly found out that Smart Time was the most functionally complete. We discovered many vendors can do timekeeping, but only Smart Time can prodigiously do time entry and time capture together — both on the desktop and on mobile devices.”

Smart Time is an all-in-one timekeeping platform for law, accounting and consulting firms. The Smart Time on-demand time capture and time entry application enables firms to effectively collect, track and recoup billable time, thereby increasing revenue and profitability. Smart Time runs in a browser on the desktop. Native applications are also available for iOS, Android and Windows devices.

Flaviá added: “We got the system live in just a few weeks. It is completely integrated with our Aderant accounting system. We are continually amazed by the richness and functionality of the Smart Time platform. In the next phase, we will distribute mobile time entry to our fleet of Android Samsung smartphones — that way our attorneys can enter time anywhere at their convenience.”

“We are very pleased to welcome Pellerano & Herrera to the Smart Time family of firms,” said Todd Gerstein, CEO and founder of Smart WebParts. “We look forward to supporting the firm’s ongoing success with Smart Time.”

About Pellerano & Herrera

Pellerano & Herrera has been the leading law firm in the Dominican Republic for over two decades. Established in 1952, the firm is typically involved as counsel in all major transactions in the country and provides advice for most major international players. The firm’s multidisciplinary team of lawyers is recognized as the most comprehensive and sophisticated in the market and seeks to provide legal solutions to clients in all areas of business. Pellerano & Herrera is especially well-recognized for its expertise in handling complex matters in the areas of mergers and acquisitions, joint ventures, project and structured financings, antitrust and unfair competition, among others. (www.phlaw.com)

Time-Writing Knowledge Management Activities

nickmilton.
Dr. Nick Milton
Director and Co-Founder, Knoco Ltd.
Special Guest Post

A common question from clients in professional services, legal or consulting  firms, which usually operate a strict time-writing regime, is “How do we  Timewrite KM”?

How do you timewrite, and therefore bill, time spent in  Knowledge  Management activities?

Is the time written and billed to the  relevant client? Or do you introduce Knowledge Management as a separate time  code, and therefore treat it as an overhead?

Approaches seem to vary,  with some companies allowing neither, therefore relegating KM to a “personal  time” activity.

Personally, I think KM should be billed to clients.  Knowledge Management should only be introduced if it is going to benefit  clients, and indeed the whole purpose of Knowledge Management within a  professional services firm is to “bring the whole knowledge of the firm to bear  on each client’s problems”. Therefore KM is part of providing a better service  (in fact you could see KM as a component of good business practice), and should  be paid for by the client. Therefore the time spent in Peer Assists, After Action reviews and even Retrospects should be billed to the client, by the logic of  “we provide a better service to you through KM, so KM is billed as part of that  better service”. (Of course, by the same logic, if KM is not delivering a better  service, then you should stop doing KM). Timewriting in this way keeps the focus  on KM as a means to support the clients.

Giving KM a separate  timewriting code implies that KM is an add-on, and an overhead, which is why I  don’t like this approach. KM should be seen as an investment, both for the  client and for the firm, and not as an overhead cost.

Not allowing  people to timewrite KM at all will kill KM, unless you can find a sneaky way  around the system. Last week I was discussing just such a sneaky way, with a  KMer from a company with no KM charge code, and where nobody would spend any  time on Retrospects or Lessons Learned. However one thing they do, on every  client project, is to assign a junior as part of the juniors’ Development  Activity.

Here they have the opportunity for KM by Stealth – to use the  Junior as the corporate learning resource. The junior can keep a “learning blog”  or “lessons blog” on which they can identify and publish all lessons and good  practices recognised on that project. This is analogous to the “commanders  blogs” used in the Army, which prove an excellent source of learning. The blog  allows the junior to reflect and learn, and through that public reflection  allows the firm to learn as well. The community of learners can take a role  similar to the “lessons learned integrators” but without the  supporting lessons learned system.

Of course KM by stealth is not a long term solution, and should only  be used to demonstrate the value of KM with sufficient clarity that it becomes  fully adopted, which means it then becomes a valid timewriting activity and a  cost/investment that can be passed to clients.

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Dr. Nick Milton is director and co-founder of Knoco Ltd. Working with Knoco Ltd, Nick has been instrumental in developing and delivering KM strategies, implementation plans and services in a wide range of different organizations, many of them Oil-sector Majors. He has a particular interest in Lessons Learned programs, and has managed major lessons capture programs, particularly in the area of mergers and acquisitions, and high technology engineering. He is the author of “The Lessons Learned handbook” (Woodhead publishing, 2010) and “Knowledge Management for Teams and Projects (Chandos Publishing, 2005), and co-author of “Knowledge Management for Sales and Marketing (Chandos Publishing, 2011) and “Performance through Learning – knowledge management in practice” (Elsevier, 2004). Prior to founding Knoco, Nick spent two years at the centre of the team that made BP the leading KM company in the world, acting as the team Knowledge Manager, developing and implementing BP’s knowledge of “how to manage knowledge”, and coordinating the BP KM Community of Practice.

Make the Timekeeping Honor Roll

Esposito_ALA_Headshot .
By Frederick J. Esposito,
Director of Administration, Meyer, Suozzi, English & Klein, PC

Wise lawyers know that contemporaneous timekeeping is essential to the success of any fee arrangement—and to the overall financial success of your law firm. Lawyers who reconstruct their time weekly tend to lose 25 to 30 percent of their time, and those who enter time on a monthly basis can lose as much as 55 to 70 percent.

To illustrate, assume an attorney is billing at $150 per hour and doesn’t capture 15 minutes a day. When you do the math over the course of a year, that one attorney could lose as much as $9,000 a year in billable time—and a firm with 25 attorneys could lose as much as $225,000 in billable time and potential fees. That is a significant number to any law firm.

You Know the Type

Despite statistics that illustrate the impact lost time has on a firm’s bottom line, law firms continue to have chronic offenders. To paint the proper landscape, there are four types of timekeepers:

  • “A” students. These timekeepers are always ahead of the curve by entering their time daily and are low maintenance.
  • Need a kick. These timekeepers generally have 90 percent or better of their time entered each week, but require more frequent prompting and some maintenance.
  • Special friends. These timekeepers are usually missing several days of time at any given point and require constant follow-up.
  • Own worst enemy. These timekeepers are clearly working the hours, but—for whatever reason—do not always record all of their time. Since they have concerns that supervising attorneys will think the time entered is excessive, they often record less billable time just to stay off the radar.

Everyone Can Be an “A” Student

Getting to the honor roll for contemporaneous timekeeping can be a slow and methodical process. Here are five tips to ease the way.

  1. Start slow. Make a commitment to enter your time in small increments throughout the day. From the moment you arrive in the office, use a clipboard with a timesheet or go the system-savvy route and use a timer. Most time-and-billing software packages and apps have timers to facilitate time entry. Commit to recording your time every 15 minutes or every time you switch tasks. Incremental steps will help get you into the habit. Whether handwritten and entered in the system by your support staff, or by direct entry (the preferred method), this is a step in the right direction.
  2. Try, try again. If you forget to record some of your time on a particular day, don’t give up because you “blew it.” Just start recording time again as soon as you realize you fell short. Timekeeping will be more accurate if you have to re-create just a few hours, rather than a few hours plus the rest of the day.
  3. Set up reminders. As ridiculous as this may sound, place a sticky note on the inside of your office door, on your computer screen, on your phone, or even on the steering wheel of your car as a reminder to keep recording your time. I know of one firm that went to the extreme of placing time entry reminders in each of its restrooms to make the point. You will find things go much more smoothly if you set up your own reminders, rather than wait for the “time cops” to knock on your door.
  4. Inspire to aspire. When you don’t track your time and have to reconstruct it, take note of how long that takes you. Remember, reconstructing your time is not only likely to be inaccurate (capture rate significantly decreases with time), but it will take more time to reconstruct than to actually enter it in steps. Some lawyers try to re-create their time by reviewing emails. As methodical as that may seem, you are not capturing all of your time this way. Also, whenever you must reconstruct your time, it means you are either shortchanging yourself or overcharging your client, and consequently dealing with the issues surrounding both scenarios.
  5. Keep telling yourself there is a reason. Yes, many view time entry as “an administrative task that gets us paid.” Once in a while, remind yourself of the connection between the accuracy of your time and the firm’s ability to generate timely billing and receive timely collections. Firms that keep contemporaneous time tend to generate 25 to 40 percent higher revenues than firms that do not keep contemporaneous time. This is a real incentive to improve!

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Frederick J. Esposito, Jr, CLM, Director of Administration/Chief Financial Officer for the Garden City, NY law firm of Meyer, Suozzi, English & Klein, PC, has more than 20 years of law and accounting firm experience. He is a frequent speaker and author of articles on a wide-range of topics, including financial, strategic, Alternative Fee Arrangements, Legal Project Management and profitability models. Last Fall, Long Island Business News named him CFO of the Year. In addition, he has been a Certified Legal Manager (CLM)SM since 2006, the only CLM on Long Island, and is a member and Chair of ALA’s Certification Committee.

Strategy Brief: Do You Charge for Thinking?

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.

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

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.

Smart WebParts Widens Global Reach with Smart Time Version 3.15 Release

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.

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

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.

Billable Time?

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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

Take the Time Recording Challenge

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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

Legal Project Management: Where IKEA Meets Law and the Challenges Implementing It

By Danielle Olofsson
Fraser Milner Casgrain LLP
Special Guest Post

Legal project management is one of the more recent trends to affect the practice of law. Whether it is a passing fad, as its detractors dismiss, or here to stay, as its advocates would like, its implementation in law firms will ultimately depend on their clients’ will to have files managed according to project management principles. Clients, however, are unlikely to request this unless they perceive a direct link between LPM and the bottom line. Until LPM addresses pricing, budgets, and fees, the merits of Gantt charts, work breakdown structures, and communication plans will largely remain ignored.

One of the most disappointing aspects of conferences and publications about LPM is the lack of concrete information explaining to lawyers how to accurately price, budget, monitor, and map the services they provide.

On several occasions, following particularly impressive presentations on how LPM is being introduced at their firms, I asked the speakers about budgets and pricing, only to be told: “Oh we aren’t there yet,” or “That’s a hornets’ nest we don’t want to poke.” Whether these answers truly reflect the situation at the firm in question or whether the speakers are protecting their trade secrets for more client-focused venues, openly poking that hornets’ nest is the only chance LPM has of effecting any change.

At its most effective, LPM is IKEA applied to law. A file, like a piece of furniture, is broken down into stages and tasks and then assigned, priced, and delivered to meet client expectations regarding schedule, budget, and quality.

The challenges that confront any proponent of such an approach are numerous. The largest is probably psychological. As lawyers, we are convinced that everything we do is unique and difficultly quantifiable. While this still holds true of certain practices, Mark Robertson and James Calloway, in Winning Alternatives to the Billable Hour: Strategies that Work, estimate that 60 per cent of the legal market is comprised of commodity work.

The minute we are invited to respond to a call for proposals, the message the client is sending is that any number of firms can provide a service they deem acceptable (if not interchangeable). It is up to the firm to convince the client why it should be retained — in essence, how our bookcases are any different in terms of price, quality, treatment of the environment, or any other topic a firm is called to describe, from those of its competitors.

Another challenge is a practical one: how do we provide an accurate budget to a client?

While certain clients are still content to receive an estimate that is based on an amount somewhere in between a maximum and a minimum price with a 15- to 20-per-cent buffer, increasingly many demand exact costing as well as precise descriptions of the services they are to receive. Some clients even refuse to pay by the hour.

The solution to this is not complicated, but it involves breaking down a mandate into various steps and assigning codes to each when entering time on a file. Although it requires a little more administrative work, this cost-accounting approach to time entry has at least two advantages. To begin with, it enables us to know exactly what a certain task costs. It also lets us respond with greater confidence to requests for alternative fees.

While much is made of alternative fees, there is still no market to gauge an acceptable fee. Breaking our services down into tasks allows us to know what it costs us to produce this service and, by extension, what fee can be attributed to it.

In response to those who view the above as heresy, arguing that each file is different, I respond — only slightly tongue in cheek — that so is each bookcase. It is true that a variety of unpredictable events may affect the ultimate cost of a service to a client, but these events do not render a file requiring a specific type of service that different from another file requiring the same services.

For example, each share-purchase transaction requires due diligence, negotiations, a share-purchase agreement, as well as myriad other documents that don’t change substantially between files. If they did we would not be able to use precedents the way we do.

But the debate over to what extent a legal file resembles a bookcase is ultimately irrelevant to the client who is only asking that it be priced more like one. This is why if LPM is to effect the change its proponents say it can, it would do well to shift its focus from work-breakdown structures and client-communication plans (things most lawyers do anyway) to address the thornier issues of pricing, budgeting, and expense monitoring. Until it does so, LPM will remain largely irrelevant to clients and consequently untouched by lawyers.

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Danielle Olofsson is a knowledge management lawyer focused on civil law at Fraser Milner Casgrain LLP in Montreal.  She develops and enhances legal documents to reflect the latest developments in the civil law and business practices. Responsible for monitoring and analyzing changes in the law and industry, Danielle also develops new resources and tools and provides relevant information to lawyers and clients of Fraser Milner Casgrain LLP (FMC). As a member of the firm-wide Knowledge Management Department, she works closely with the rest of the team on a broad range of knowledge management initiatives.

Before joining FMC in 2010, Danielle practised corporate and commercial law for over six years with major business law firms in Montréal, Paris and Stockholm. She also lectures in Common law at the University of Montréal. Danielle can be reached at danielle.olofsson@fmc-law.com.

The Tyrannical Beauty of Time Keeping — Selling Your Life in 6 Minute Increments

by Richard Cassidy, Hoff Curtis
Special Guest Post

It was Abraham Lincoln who famously said: “A lawyer’s time and advice are his stock in trade.” Bearing in mind what he said, it is important to note what Lincoln did not say. He did not say: “A lawyer’s time is his stock in trade.”

Time is our stock, that is, it is the cost side of the equation. But it’s not really our trade, in that it’s not what clients want to buy, and it’s certainly not what they want to get.

Clients want results. Normally, results can’t be guaranteed. So client have to settle for less. If clients can’t buy results, they will buy the next best thing: attorney work product.

Advice and advocacy are actually the products clients buy from lawyers. Time is a way that we, the lawyers, apportion the cost of producing our product among our clients. But the truth is that to the client, some tenths of an hour  — even from the same lawyer — are valueless and some are intensely valuable. Should the client really pay the same for very different products, even when the increments of time required to produce them are identical?

“Read perfunctory filing letter”

“Value your case.”

The first activity gets the client essentially nothing. The second, if done with excellent judgment, may make all the difference.

If you look through the literature of law office practice management for the last 10 or 20 years, you might think that Lincoln’s comment — and hourly billing itself — have become obsolete. That literature is full of writing about the many alternatives to hourly billing. It’s clear that lawyers and clients would prefer to be done with it.

For good reason. For lawyers, billing by the hour takes discipline. It is a discipline that somehow many otherwise talented lawyers cannot or will not learn. Many a young lawyer with all the intellectual skills, and even, in other respects, the temperament to be a great lawyer in private practice, is defeated by time-keeping. Many try private practice and move quickly to government service or an in-house counsel role in order to avoid it. Many stay in private practice, but have a chronic struggle with keeping good time records.

Clients like it even less. Hiring a lawyer on an hourly basis is like hiring a building contractor on a time and materials basis. The customer has no cost predictability and fears that the contractor has no incentive to be efficient.

Thirty-two years into private practice, I appreciate the problems with the hourly billing system. I’ve always hated keeping contemporaneous time records and over the years, I’ve tried any number of different things to avoid doing it or at least to make the job more palatable. It took a long time before I found some practice management software that made it reasonably convenient to actually time my work as I do it, even when I have a day spent constantly skipping from one short task to another.

Part of my practice has always included contingent fee work (an instance where client’s do buy results!), mostly on personal injury cases. Originally, not keeping time records on such cases was something I liked about them. It felt liberating not to worry about writing down every tenth of an hour, attributing it to a client and matter, and creating a written description of the work completed. I also liked the freedom to decide, pretty much on my own, what tasks needed to be done and how much time to put into them, without concern that the client would feel the case was being “over-lawyered,” or simply could not afford to pay the bill.

But one thing I discovered about my own behavior was that, when I did not record my time on contingent fee cases, I was less efficient than in my hourly cases. By comparison, in hourly cases, knowing that I was recording my time and that a client would be reviewing my bill and be asking, implicitly or explicitly, whether the resulting work was worth the fee, I felt pushed to move fast and get the work done quickly.

My construction clients taught me something else: to price work at a profit, you must understand your costs of doing business.

As a result, for many years and on all my legal work, I have kept the most accurate, contemporaneous time records that I possibly could, even on contingent cases (The truth be told, I even keep them on pro bono cases.) As a result, I understand far better than I otherwise would which kinds of cases are profitable, and which are not, and what the cost implications of various substantive decisions about cases are likely to be.

As demand for my time has grown over the years, my own level of confidence in the fairness of the bills I render has grown with that demand. The ethics of charging legal fees requires the exercise of “billing judgment,” that is, adjusting the legal fee that would result from simply multiplying the numbers of hours worked by the hourly rate, to take other factors into account. Normally, one’s fee agreement with the client only leaves the option of reducing the bill on that basis. Early in my practice drawing my bills was a painstaking, conscience-rending process.

I still have to exercise judgment, but it’s much easier now than it was when I was a young lawyer.

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Richard, one of the founders of Hoff Curtis, has more than 30 years experience with the practice of law in Vermont. He firmly believes that the best representation and advice comes from the most objective perspective that a legal professional can attain. Richard has represented all sides in many kinds of disputes: plaintiffs and defendants, employers and employees, injured parties and insurance companies. He believes that the breadth of his experience benefits all of his clients.  Richard can be contacted at rcassidy@hoffcurtis.com.

One Out of Thirty Attorneys Loves Timekeeping

.By Matthew Krejci, J Ferm LLC

A year ago, we embarked on an extensive research project assessing  the management pains in the legal profession. One aspect of the research involved detailed interviews of thirty attorneys to identify developing trends. Shortly after starting our interviews, it became apparent timekeeping was one of the top management pains for attorneys.

The first 29 interviews gleaned the following quotes:

“Timekeeping is the most unpleasant experience of being a lawyer.”

“Every attorney hates timekeeping.”

“The  practice  of billing time makes liars out of honest people.”

“It is inevitable time is lost every day.”

“Thinking is hard to capture on a time sheet.”

“Excessive time is lost each week due to having to record time.”

Then we interviewed Attorney #30. With genuine excitement, he stated: “I enjoy timekeeping! It is the opportunity to showcase my talents for my clients. I love entering the details into our billing software. It’s my livelihood. If I don’t bill, I don’t get paid.” Imagine our shock when we realized he was not kidding. So why do 29 of 30 attorneys share the opposite view?

Timekeeping creates angst among attorneys, and is a symptom caused by the infamous billable hour system. Without the billable hour, there would be no .2 phone call, followed by a .3 conference, broken up by .2 in the restroom, continued  with a .5 of  reviewing complaint, finished off by a .2 of writing things down frantically on a steno pad. Can you imagine the sense of freedom from an alternative flat fee billing arrangement whereby you wouldn’t have to record any of this, and you’d  still get paid  for your hard work on a case? You could even take a .3 in the restroom! Eventually, significant portions of the legal practice will move to alternative billing methods, but until that day, we must make do with what we have and learn from Attorney  #30’s timekeeping exuberance.

No two attorneys keep their time in the same way. Some scratch it out on a steno pad, some dictate it for their legal assistant, and some enter it directly into a software billing system. In the majority of cases, it is reviewed at least one time by another attorney before it goes out to the client. Inevitably there is time lost in the process.

The key, according to Attorney #30 is to track your time contemporaneously. Each and every one of us can learn to record our work as it is completed. Most law firms do not spend a lot of time training their new associates on the process of timekeeping. It does not take long for a negative attitude toward the entire process to formulate. Attorneys quickly realize that  if they are too efficient in their work, they get penalized and may hear about  their  low  billable hours from their superiors. If the attorney is not efficient enough, their time will be cut and opportunities for advancement may be diminished. Furthermore, clients can be overcharged  for the work of less than efficient lawyers. Firms will benefit from teaching their young associates the effective timekeeping techniques and positive outlook successfully implemented by Attorney  #30.

Many attorneys don’t even realize the way they are keeping their time is inefficient. We interviewed one attorney who bragged to us about his effective process.  “I keep a grid sheet at my desk and when I do something I write it down. Every three or four days I dictate my time for my secretary. After she types it up, I review it. After I give the okay, my secretary enters it into our billing software system.”  This “effective” process require a single time entry to be written or typed a total of three times and then reviewed three times before it lands in a pile on a partner’s desk to be reviewed again. It is easy to see how attentive but ineffective timekeeping can become cumbersome rather than helpful.

Thank goodness for Attorney #30! These strategies will help attorneys stay focused, organized, and profitable while providing clients with exceptional services.

Attorney #30’s Five Tips for Efficient Timekeeping

1.    Keep time contemporaneously with each task performed and in adequate detail: Carry the pen and pad with you at all  times. You learned to carry the cell phone and as a business tool the timesheet is just as important.

2.    Itemize  your  time: This  will protect you later if you are forced to explain yourself to a client or to the court when opposing counsel charges your claim for attorney fees is exorbitant. Some clients require block billing, so obviously if a client provides guidelines you need to keep those in mind.

3.     Record your time once: Avoid confusing yourself or your assistant by not taking notes on separate pieces of paper and then trying to coordinate the details.

4.    If your firm offers a timekeeping software program, use it! If your personal computer contains the firm’s billing software, youhave no excuse for not entering  it yourself. It shouldn’t take any more time than scribbling it out on a piece of paper and it saves your secretary time in having to decipher your notation. Make a point to have your time entered before you leave for home each day.

5.    Prior to submitting your time, review it once for mistakes and spelling errors: After  you have done so,  your  timesheets are ready to go to your supervisor or client and were only recorded and reviewed once. Instead  of losing two billable days per month as one attorney we interviewed claimed, you may only lose a small portion of one day per billing period.

With an overhaul of your timekeeping process, you too may learn to love timekeeping. It sure would  make life easier to share the outlook of Attorney  #30. Use timekeeping as a way to showcase your talents….and to get paid.

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Matthew Krejci is the Project Manager for J.Ferm No Frills No Fluff Management Skills Program: Lawyers Edition where he leads interviews with law firms all over the US, uncovering their most pressing management challenges. He is an experienced litigator and received his J.D. at Capital University Law School in Columbus, OH. For more information, please visit the No Frills No Fluff website at: http://www.nofrillsnofluff.com or matthew@nofrillsnofluff.com

13 Reasons Timesheets Will Never Die

Nor should they.

Special Guest Post

by Edward Mendlowitz, CPA
Partner, WithumSmith+Brown

Time sheets are an essential part of any professional services organization. Some people contend that they should not be maintained since they should not be the basis of any pricing – that fees should be solely based on the value to the client. I disagree.

Even if we assume fees should be solely based on “value,” time records provide an important role in information and control and should be maintained.

Here are 13 reasons why no firm should give up on timesheets:

1. Time records are a method of keeping track of costs. While information is entered at the billing rates, discounting it makes it into a cost system.

2. The information can be used for future scheduling; determining if work is done at the proper skill level; to identify who worked on the client and if someone not scheduled worked on the client it could lead to why they did; to determine if work was done that was not part of the prior agreed upon engagement; or to just see how close the actual work matched the budget.

3. Flex time and telecommuting have provided less visibility of staff, less hands on review and discussions and less MBWA (Managing by Wandering Around opportunities). Time sheets provide a means of tracking staff activities.

4. Time records provide a measurement of the type of work that is done in non-productive areas such as answering tax notices, preparing extensions, or redoing work where the accountant didn’t have all the information when they started.

5. Time records are a way to monitor client satisfaction by measuring work done correcting errors or on work that was redone.

6. An example of the benefit of keeping time records was where it was highlighted that a low-level tax department staff person worked on quite a few clients that she had no reason to work on. When we looked into it we found that she was continually asked tax questions by mid level audit staff because they got the answers they needed quickly, while the higher level tax department people pushed these requests aside. This provided valuable information to evaluate the tax staff’s interaction with the audit staff and enabled substantial changes that sped up the turnaround for those questions, and eliminated an oblique bottleneck.

7. Insightful information was found out when it was noticed that a high-level tax manager decided to lump all his tax return review time into one account. Not only was unrecoverable billable amounts lost until he was set straight, but it also showed that he didn’t quite get it.

8. Time summaries also helped us identify considerable time spent on low fixed fee tax returns because the clients decided to engage in hundreds of day trading transactions or invest in hedge funds with 30 page K-1s that year, which we were then able to partially bill for, and better schedule the following year’s tax work.

9. We found that considerable time was spent redoing completed tax returns when amended 1099s were received from the broker. We were able to adjust the timing of the work on those returns in later years.

10. The time run revealed considerable time on extra services such as fixing up erroneous transactions; finding errors in a bank reconciliation and comparing it to the client’s check book entries; helping a client fill out college loan applications; and sometimes a lot of time is spent listening to a client’s ramblings because the staff person didn’t want to be discourteous.

11. The time records helped us realize the extra time spent on a small fixed fee “commodity service” client that would always stop by the office to pick up her payroll and sales tax returns. Since she was in here, she asked if someone could help her by showing her where to sign and who to make out the checks to. Well it seems the person that was usually in the office was a tax partner who would spend forty-five minutes to an hour with her also answering other business questions since she was there already. In one year this unallocated and unscheduled time amounted to sixteen hours. We reviewed this with the client and were able to get some extra billing for it (not too much, but more than we would have had if we didn’t see this when we did the realization schedule). And since we were not able to get compensated for this “hand holding” personalized service going forward, the decision to drop the client was pretty easily made.

12. Client and staff realization can also be charted if you have time records. It helps us with scheduling and maximizing resources by assuring the right level person is working on a client. The realization information also shows us which staff is good at downward delegation, and which managers accept upward delegation from staff. And client fee realization provides the profitability data for each client.

13. Time is our inventory and hours the units. Inventory needs to be controlled. Time sheets seem to be the best way of doing it. If there is something better, then we should look at it. Not having any system or controls is unacceptable and just not good business practice.

We all know most of the things that we see in the time records, but looking at the time run forces us to focus in on it in a manner that we don’t take the time to do when we are in the middle of getting client work out.

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Ed Mendlowitz, CPA, ABV, PFS, is a partner in the New Brunswick, N.J., office of WithumSmith+Brown, and has over 40 years of public accounting experience. The author of 16 books, Ed has also written hundreds of articles for business and professional journals and newsletters. He is the contributing editor to the Practitioners Publishing Company’s 1998/1999 706/709 Deskbook, and the AICPA 2004 edition of the Management of an Accounting Practice Handbook and is on the editorial board of Bottom Line/Personal and Tax Hotline financial newsletters.  Ed can be reached at emendlowitz@withum.com

Pathetic Time Tracking in the Legal Profession

Special from the Edge International Communiqué

Law firms are their own worst enemies in the effective use of billable hours.

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Gerry Riskin
Founding Partner, Edge International

Managing time in a law firm isn’t only about billable and non-billable hours - it is about creating a dashboard that allows lawyers to elegantly drive client expectations relating to time-frames and costing.

Sad State of Time Tracking in Law Firms

I asked Todd Gerstein of Smart WebParts (www.smartwebparts.com) what his latest data on this subject looked like… he said: “Less than 40% of all timekeepers keep their time contemporaneously; the silent majority (60%) reconstruct their time when they prepare their timesheets.”  He went on to say: “The compliance numbers are just terrible. Most of the time 80% of the partners are not in compliance. Associates are not  in compliance 35-45% of the time.”

Todd said this about Month End Cut-Off:  “We measure the amount of time that is put in after the month end cutoff… which is at risk for billing and collection realization problems.  It is not uncommon to find 5-7% of time (wip value) at risk to miss the billing cycle.  It also seems to be one of the issues that sets off managing partners.”

Ramifications

If the loss of inventory is not bad enough (cash in the door),  there is a much greater and more sinister ramification of the messy and inadequate timekeeping practices. In this modern era of Legal Project Management, it is imperative that lawyers who lead teams understand on a daily basis where their projects stand in the context of two vital metrics:

  • Time to completion as compared to the client’s timeline expectation, and
  • Cost to completion as compared to the client’s budgetary expectation.

Destroying the Client Relationship

The ability to communicate variances and projections with clients on an ongoing basis affords the law firm its greatest opportunity to maintain high levels of client satisfaction, and from time to time, to obtain variances with the client’s blessing. Most law firm lawyers do not have a dashboard.  They fly blind.  The failure to accurately track time distorts the picture and ultimately annoys the client.

Recommended Steps:

1.  Stop the theft now: Stop tolerating sloppy time recording practices by individuals.  It is not charmingly idiosyncratic: it is theft, theft from the individual timekeeper, theft from the firm, and yes, even theft from the client who deserves accurate information.

2.  Provide the best tools and technology: Todd Gerstein’s system puts your existing systems to work for you making the time tracking process easier and more accurate.  If you have a better way fine… but you need to compensate for the human foibles that make the current processes inadequate.

3.  Train: Tracking time well is an essential skill… help your people acquire and improve that skill.

4.  Keep the client in the equation: Time tracking is not only for your internal management … it is also for the benefit of your clients who are happy to pay money for value but hate surprises.  Create systems that make it glaringly obvious when your lawyers are not tracking their time accurately.

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Gerry Riskin is a Canadian lawyer and Business School graduate with a global reputation as an author, management consultant and pioneer in the field of professional firm economics and marketing. After winning two Queen Elizabeth Scholarships, he practiced law from 1973, in 1979 becoming a partner with one hundred-year-old Emery Jamieson and then in 1984 becoming the Managing Partner of Snyder & Company with offices in Canada and Hong Kong. Gerry was consistently one of the top three rainmakers in his firm and quickly began to develop a reputation which led to a demand for his abilities to teach others to do the same.

In 1983, Gerry co-founded The Edge Group which in January 2001 evolved into Edge International. Over our history we have topped the list in a survey depicting the most popular marketing consultants by major U.S. firms and have been named one of the top three legal consultancies by U.S. Managing Partners.

Gerry has clients which include the most prominent professional service firms in the world, has led numerous workshops, retreats and seminars and has been engaged to assist firms requiring marketing, strategic planning, one-on-one coaching, merging, multi-office management, practice group and industry group management, client relations skills training and management training.

Gerry lives in the British West Indies. He can be contacted in the U.S. or Canada at +1 202-957-6717 or, from other countries, using the Edge toll free numbers. He may also be contacted by e-mail at riskin@edge-international.com

Visit Gerry’s Blog, Amazing Firms, Amazing Practices at www.gerryriskin.com

Where Does the Time Go?


SPECIAL GUEST POST

Thomas Wallerstein
Colt / Wallerstein LLP

For attorneys who bill by the hour, one of the less enjoyable aspects of the job is recording time. For many associates, entering time is a necessary evil done only under coercion. The process also can be fraught with pressure. Associates know that all too often their worth might be measured by their billable hours.

Of course, for big and small firms alike, we tolerate the timesheets because they are our firms’ lifeblood. Recording our time enables our firms to generate their invoices. The inherent purpose of entering our time is to generate this request for payment.

But an invoice can and should do much more, especially for a small firm or solo practice….

Requesting payment obviously is important. But there are also several other purposes an invoice should serve.

Small firms and solo practices often compete with their larger counterparts on price. Billing entries and invoices are the ideal place to communicate to the client the value the lawyer is providing. Each entry should have enough detail to not only justify the time claimed, but also to show the value received. The more descriptive your billing entries, the less likely the client is to question or balk at the time incurred.

Invoices also can be more than the sum of their parts. Over and above each individual billing entry, the entries on an invoice can also serve, collectively, as a monthly progress report. A client should always have a pretty good idea what is happening in litigation by virtue of the invoices alone. Ideally, your invoices will show concrete progress towards a discrete goal, such as resolution through trial or settlement.

Of course, it’s much easier to use the invoice to emphasize the value provided when the client is actually getting good value. Many clients feel beholden to their attorneys, but resentful. This sometimes is a function of the client not understanding exactly what work the lawyer is doing. More precisely, sometimes the client does not understand or agree with the value proposition underlying what the lawyer is doing for his money.

It’s not a shocking secret that many associates are under pressure to bill a lot of hours. Unfortunately, that can certainly tempt some attorneys to commit billing fraud. Others routinely bask in the broad gray area. Recording time is subjective and attorneys have a lot of leeway in how they choose to account for and bill their time. Attorneys doing the same work for the same amount of time may view and calculate their billable time very differently. The range of subjectivity gets even bigger when the time is not recorded contemporaneously.

Sophisticated corporate clients often have in-house counsel who have worked in law firms and understand the dynamics inherent in firms. Many are acutely aware of the inevitable pressure to maintain high billable hours. Inevitably, that pressure leads to higher average bills even if an ethical line isn’t crossed. I’m hardly the first to note that the pressure for billable hours is counter to clients’ financial interests.

Running a small firm or solo shop often involves a very different set of concerns and pressures. Although I have a lot of self-imposed pressure to generate new business, I feel less pressure to maximize my billable hours and my associates don’t have billable hour quotas or bonuses tied to billable hours.

To many people, especially non-lawyers, recording work in six minute increments seems somehow absurd. It’s such an artificial increment that I can’t help but agree on some level. Still, I’m not sure there’s a great alternative.

Regardless, my own distaste for entering my time isn’t because I think it is absurd or unfair that I have to account for my work with such precision and in such small increments. To the contrary, when entering my time I’m generally reminded and humbled that my clients are willing to pay as much as they are for a few minutes of my effort. Despite that motivation, the main reason I don’t look forward to entering my time every day is because the process is so time-consuming. (And, unlike some, my firm doesn’t view recording time as a billable event.)

Recording time is itself time-consuming precisely because I’m aware that my invoices are such an important communication with my clients. Like it or not, admit it or not, requesting and collecting payment is a critical element in any relationship between attorney and client.

Gone are the days when a firm could send the monthly invoice with the single line item, “legal services rendered,” and the amount. But even if I could do that, I wouldn’t want to miss the chance to show my clients the value I try to provide. A goal of my firm is that our clients actually have a positive visceral reaction upon reviewing our invoices.

Idealistic? Sure. But if you work hard, and you’re proud of your work, then there’s no reason your invoice can’t communicate those perceptions. If your client still simply disagrees, then your problems are bigger than billing and communication.

Tom Wallerstein lives in San Francisco and is a partner with Colt Wallerstein LLP, a Silicon Valley litigation boutique. The firm’s practice focuses on high tech trade secret, employment, and general complex-commercial litigation. He can be reached at tomwallerstein@coltwallerstein.com.

Smart WebParts Releases Smart Time Version 3.10 with Time Gap Analysis

Time Gap Analysis helps users identify and book missing time, while a new dashboard gives administrators insight into firm and individual work trends.

Smart WebPartsLOS GATOS, CA. – February 14, 2012  – Smart WebParts, the leading provider of timekeeping software for the legal industry, today announced the availability of Version 3.10, which adds Time Gap Analysis and a new Administrative Dashboard to the application.

Smart Time is an intuitive time entry and time capture software tool that gives timekeepers perfect recall, enabling them to prepare complete and accurate timesheets. It answers the question, “What did I do today and is it billable?” by providing the attorney a detailed journal of their day’s activities. Since Smart Time finds missed or “leaked” time that might not otherwise get billed, it can increase a firm’s billable hours and ultimately its profitability.

Smart Time polls a firm’s systems and desktops to find information about every event the timekeeper completed throughout the day. It finds emails, calendared meetings, phone calls, mobile calls, research, documents, dictation and more. Event data is cross-referenced by the Smart Time Relationship Engine to assign client matter codes, while supplementary data is added to the event descriptions to help jog the timekeeper’s memory. Users can access the system via the Smart Time desktop, a nightly automated email report or via a mobile device.

With this release, Todd Gerstein, CEO and founder of Smart WebParts, highlighted the company’s emphasis on maintaining an aggressive product development cycle. “With every release, you will see new features to improve the user experience,” he said. “Our products are designed to be intuitive and highly personalized, and this latest version of Smart Time delivers on both counts.”

Time Gap Analysis allows the user to drill down on daily, weekly and monthly views within an “Outlook-like” calendar interface to find gaps of work not yet converted into time entries. Within the weekly or daily views, users can also see time entries organized on a timeline, which the user can then use to edit, create new entries, or see gaps that need filled.

The new Administrative Dashboard offers system administrators the big picture of what’s happening firmwide, officewide and with each timekeeper, through its ability to display working patterns and trends over different timeframes. Additionally, using it enables better management of the integration between Smart Time and the accounting system.

Smart Time is available in two editions.

  1. Pro  Edition: Ideal for organizations that want to provide their timekeepers with Time Capture reports but are not yet ready to replace their legacy time entry system.
  2. Enterprise Edition: The right choice for organizations that want to replace their legacy time entry systems with a complete system that includes both time capture and time entry.

“We love creating products that excel in every way. When we see room for improvement, we don’t wait for the market or a firm to compel us to undertake new development. We build products that perform, are customizable, reliable and richly featured so that our users stay happy and share in our competitive advantage,” said Steve Bronstein, CTO and Founder of Smart WebParts.

About Smart WebParts

Smart WebParts, LLC (www.smart-webparts.com) provides innovative software solutions designed to help law firms and other professional services organizations maximize profits. The team consists of experts with more than 100 years combined experience in the finance, accounting, process engineering and technology industries. 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.

Whitepaper: Increase Your Revenue with Time Capture

Since the billable hour was invented, two things have existed: 1) leaked time, and 2) timekeeping headaches. These drain both profits and productivity.

As a means toward solving these problems, we offer this white paper, titled “Increase Your Revenue with Time Capture: How Leaked Time Affects Your Bottom Line, and How to Fix It.”

In it, you’ll find out which work situations are most likely to leak time, estimates of the actual amount you could be losing each year, and how you can give your timekeepers “perfect recall.”

We think the information presented in this white paper will show you a path toward improved profitability and improved business processes.

Click Here to Download the US Whitepaper

Click Here to Download the UK Whitepaper

Top 10 Financial Errors: #5 Don’t Track Your Time

David J. Bilinsky
Laura Calloway
Special Post from  SLAW

By the time I have money to burn, my fire will have burnt out.  ~Author Unknown

There is much talk today about lawyers moving to alternative billing. We happen to be in favour of trying to bring the practice of law back to its roots in terms of delivering value to clients (ie results-based billing) rather than just time spent on the file (input-based billing). But does that mean that you as a lawyer can give up tracking your time? To those who say yes, we respectfully disagree. While you may not bill by the hour, tracking your time does one thing at least: it keeps you honest with regard to where you spent your time and whether or not you did apply yourself to the tasks at hand.

Let’s take a step backwards and go to a traditional accounting concept, that being the costs of goods (or, in our case, services) sold.

The first step in determining whether you were profitable on a sale of a service is being able to determine how much it cost you to deliver said service. To do that you need accurate costing mechanisms that can count both direct and allocated (or fixed) costs.

Direct costs are your time, plus any direct disbursements incurred in furtherance of the matter—court reporter fees, filing fees and the like. Allocated costs are the file’s share of the office overhead—staff salaries and benefits, rent, insurance, utilities and so forth.

Because the biggest direct cost is the time that you put into the matter, you cannot determine what it cost you to produce a given result unless you can track the time you put into it—billable, nonbillable, written off and so forth.

When it comes time to distribute funds among partners, not knowing the true costs of the matters handled compared to the income generated from them can lead to gross inequities. Most firms simply look at the gross revenue generated at the conclusion of a case, but this can be misleading.

Look at two files, each of which generated $100,000 in revenue (after disbursements):

  • Matter A took three years and involved 400 hours of legal time (at $250/hr = $100,000) plus hundreds of hours of staff time.
  • Matter B took six months and 100 hours of legal time (at $250/hr = $25,000) and the same amount of staff time.

Which case was more profitable? Not only was Matter B more profitable, you could argue that Matter A resulted in a net loss to the firm, since the total of legal and staff costs exceeded revenues.

If both matters were billed on an alternative-based fee, the firm would not have realized the difference in profitability without the essential time input data.

Don’t make the mistake of treating these matters equally! If you plan to move to value (or alternative billing) you need to know the costs to to the firm of different individual matters or the cost average of different types of matters to be able to correctly evaluate your value-billing program.

Tracking your time is an essential feedback mechanism that allows your firm to improve profitability over time. It allows you to ask: “Why did we spend so much time on X?” and “How do we become more efficient at handling these types of cases?”

Without that essential cost-of-time component, the firm is flying blind – and you may end up having your fires go out when you no longer have money to burn…

————————————————————————————————————-

David Bilinsky and Laura Calloway are the joint editors of the SLAW practice tips. Laura is the Program Director of the Alabama State Bar Practice Management Assistance Program. She helps members of her bar find practice management resources and learn more about the business side of their practices.  She also writes the Simple Steps column for Law Practice.  You can visit her blog at  http://asblastword.wordpress.com/.   David is a lawyer and Practice Management Consultant and advisor for The Law Society of British Columbia. His area of expertise is enhancing a law firm’s profitability, developing strategic business planning and applying technology to the practice of law. Dave’s mission in life is to empower lawyers to apply practice management concepts to the practice of law in innovative ways that provide service excellence. He is the founder and current Chair of the Pacific Legal Technology Conference. You can visit his blog at: www.thoughtfullaw.com.

Five Predictions for Attorney Timekeeping in 2012

Todd Gerstein
Founder & CEO, Smart WebParts

Once again, we’ve come to the time of year where we all start looking forward. We’re going to harness our curiosity about the year ahead and make some predictions relevant to timekeeping. Keep reading to find out why we think 2012 will be the Year of Time Capture.

Prediction #1:  Mobility Will Change Timekeeping

 It doesn’t take a crystal ball to predict that the working world will become increasingly mobile in 2012. But what I think we’ll start to see is a greater reliance on these devices to the point that attorneys will expect their mobile platform to do everything they can do in the office. Any attorney adept at technology will have a smartphone and/or a tablet with them at all times. In 2012, timekeepers will yearn for mobile timekeeping solutions.

 Prediction #2:  Time Capture Will Become a “Must-Have” for Every Firm

 Partly because of timekeepers’ increased mobility, time continues to get sliced into ever-smaller increments. This time is highly susceptible to being forgotten or being underreported, as timekeepers’ bodies move from one location to another and their minds jump from one matter to another. Interruptions to the workday are just a fact now.

The only way to prevent the loss of this time is to have a “back-up” memory that is taking down the day’s activities (email, phone calls, document work, appointments, research, etc.) and recording them. A time capture system that is seamless and integrated into the routines and tools of timekeepers makes “finding” this time frictionless and painless. When timekeepers get a perfect record of the day’s activities at the moment they enter time, the loss of small increments of time worked is far less likely.

Prediction #3:  Time Capture & Entry Data Will Support Legal Project Management

As more and more firms adopt AFAs, legal project management will grow in importance.

To help firms better manage the client engagement, portals and matter-centric workspaces will be married to project management software. Time capture systems will create event feeds to the portals, which will show work being completed on the matter in real time for viewing in a reader.

Time capture data will also become a depository for research. Without the knowledge of how long tasks take to accomplish, firms can’t plan or estimate for engagements, potentially leaving them holding the bag at the end. Timekeeping data will also become an essential planning tool instead of something that is just passed on to the client as a bill.

Prediction #4:  Firms Will Finally Get Serious About Due Date Compliance

Firms are going to work hard to push tardy timekeepers to be more timely and accurate, in an effort to stop time leakage (and therefore revenue leakage) before it starts. (And since we know “reconstructionist” timekeepers leak more time than contemporaneous ones — who enter time as they do the work – this approach has merit.) Time capture will support compliance, since it reduces the pain of timekeeping for everyone, no matter their timekeeping style.

Firms will study compliance success stories, and based on that, create a culture of compliance within their own walls. We’ve found that successful firms make their expectations non-negotiable, consistent and clear, and include incentives and/or penalties for enforcement purposes. Fun incentives work best. The “punishment” that works best are penalties that impact an attorney’s year-end review. Compliance has been so long neglected that it is about time for law firms to clean up this business process mess.

 Prediction #5:  Firms Will Focus on Risk Management and Timekeeping

It’s an understatement to say that law firms are risk-averse, but many have not yet built ethical walls or factored their timekeeping systems into their risk management strategies. That will change.  Thanks to costly and highly public breaches, firms are looking for ways to improve security and wall off their timekeeping systems to prevent fishing expeditions within them. Now aware of the potential for mischief and worse, firms are going to implement ethical wall systems and demand that their timekeeping systems integrate with them.

Conclusion

One prediction that we’re certain will come true: Wherever timekeeping heads, Smart WebParts will be there.

Happy New Year to you all.

I Know You Hate Keeping Time Sheets, but Even in the New Era You Must Still Do So and Here’s Why


SPECIAL GUEST POST 

Jerome Kowalski
Kowalski & Associates

Some time ago, I wrote that even in the era of alternative fee arrangements and value billing, it remained essential for lawyers to record time.  I’ve been asked to revisit the issue and still come to the same conclusion, perhaps even more forcibly. There are myriad reasons that compel this conclusion.

First, despite the continued proliferation of AFA’s and value billing arrangements, the American Bar Association Model Rules of Professional Responsibility does not specifically permit for pure value billing.   Accordingly, well informed lawyers must be exceedingly careful in drafting their AFA agreements so as to meet the Model Rules.  But, even in a carefully drafted AFA, with both parties negotiating in good faith, some courts have continued to hold that fixed fees are unethical and unenforceable, requiring a plaintiff law firm suing a client to prove the value of its services based on the hours actually billed.

Sure, as others observed the old model of the client getting in your cab and all that you were concerned with was that the meter is running, but the taxi driver didn’t really care where you’re going no longer applies. In the old days, it was just about getting your fare. Today, you need to be far more concerned about where your client is going, but you need to keep that meter  ticking away for a variety of reasons, not all of which relates to collecting your fare at the end of the ride.

Just yesterday, the Delaware Chancery Court, in a derivative case in which plaintiffs’ counsel obtained a judgment of some $375,000,000,000, the court awarded plaintiffs’ counsel total fees of $285,000,000 (no, those are not typos).  The fee award came to a staggering $35,000 an hour.  Defense counsel argued for fees of less than $14,000,000.  Clearly, the battleground was neither the plaintiffs’ counsel’s customary and hourly fees nor the amount of hours billed to the case.  But, in order for these plaintiffs to celebrate a huge payday, they were required to submit a written application, which included details of its hourly billing, Similar rules exist in every bankruptcy court in the nation, which approves every fee application for every professional, save for those rare instances for which the court previously approved either a fixed or contingent fee.

In a case decided just last May, noted New York attorney Thomas Puccio successfully prosecuted a class action on behalf of New York City police entitled Scott v City of New York officers and thereafter filed a fee application for some $2,000,000, based on reconstructed time records. Puccio’s award was knocked down to $515,000,  The reason:  Puccio and his colleagues did not keep detailed contemporaneous time in derogation of Second Circuit rules which provide:

“All applications for attorney’s fees, whether submitted by profit-making or non-profit lawyers, for any work done after the date of this opinion should normally be disallowed unless accompanied by contemporaneous time records indicating, for each attorney, the date, the hours expended, and the nature of the work done.”

As one commentator on this case observed:

“This issue arises because the lawyer for New York City police officers, who successfully sued New York City for overtime violations, sought over $2 million in attorneys’ fees. He submitted a 96-page attachment to the fee motion reflecting more than 2,000 hours of work. But these were not contemporaneous records. The lawyer acknowledged that “the entries were prepared instead ‘by my office working with outside paralegal assistance under my general supervision’” and that “the paralegals based the entries on ‘an extensive database of incoming emails maintain by my law firm in a computer folder.’” In other words, the time records in support of the fee application were prepared after the case ended, not contemporaneously. The time entries were also riddled with errors and mistakes.”

The simple point is not simply that keeping accurate, detailed and timely time records is not simply the gold standard, it remains the only standard.  Yes, virtually every lawyer abhors the notion of justifying his or her daily existence in twelve minute increments, and, yes, we all now know we sell valuable services not hours, time accurate, detailed and timely record keeping still remains with us.

But, there is more.

We have also recently learned essential the need to engage in project management, particularly in AFA engagements. Project management requires maintain GANT, PERT or similar charts, identifying critical paths and projections of the time necessary for each player to reach each critical path. Each player must also provide estimates as to when he or she will reach each critical path. No project manager can effectively carry out his or her responsibilities without tracking  in real time the time expended by each player. And at  the end of the day, in order to measure the profitability of the project and the efficiency of each player, an analysis of the time expended is a vital, indeed, essential tool. Lessons learned in the required post mortm of every completed project leads to more informed decisions on future pricing. Indeed, many RFP’s require law firms to describe their project management programs.  Some clients also require that the project management software be available to the client on an extranet.

Time management is also an essential tool for risk management.  In a recently well publicized case, a counsel at a large law firm was arrested for allegedly defalcating with many millions of dollars of client escrow funds.  While all of the facts are not in, it appears that the alleged perpetrator was handling work for some regular firm clients, not recording their time and privately charging the clients for his work.  These moonlighting activities ultimately apparently required the alleged perpetrator to deposit funds in an escrow account.  Since the matter was not recorded on the firm’s records, the young lawyer apparently went across the street and opened an escrow account in the firm’s name and he was the sole signatory.  The funds in this escrow account seem to have disappeared, with the law firm being the subject of claims for the funds as well as a failure to adequately supervise the alleged miscreant. It may well be that if this lawyer’s time charges were more carefully monitored, the entire problem may well have been avoided.

While you cannot always foil a determined and clever thief, requiring lawyers to account for all of their time, including non-billable time does serve as a deterrent.  Yes, banks with security cameras and guards stationed on the banking floor do get robbed.  But, some number of thefts are deterred.

Finally, I have long advocated that finders, minders and grinders all need to be equitably compensated.  In this more perfect world, lawyers who make contributions to the firm by entertaining clients, blogging, attending conferences, speaking at seminars, writing important articles, as well as those lawyers who toil away at pure client services or engage in the thankless task of managing the enterprise, are entitled to compensation for their efforts.  These efforts shouldn’t be simply recalled anecdotally, but recorded on a timely basis.

So you’re still incredibly annoyed about recording your time in twelve minutes increments, I am afraid  you’re just going to keep sucking it up. You’re probably equally annoyed about developing creative methods of pain and pleasure to assure timely compliance with time keeping requirements, but that annoyance is not quite going away either.

As they say, there’s an app for that:  A wide variety of timekeeping programs allow a timekeeper to toggle on and off at his or her computer time working on client matters.  And for the road warrior, there are IPad, IPhone and Android apps that you can also toggle on or off and the information is downloaded to your mainframe or your cloud.

The Law Firm of the Twenty-first Century isn’t your granddaddy’s law firm. But it still requires detailed, accurate and timely time keeping of all of your activities.

© Jerome Kowalski, December, 2011.  All Rights Reserved.

Jerry Kowalski, who provides consulting services to law firms, is also a dynamic (and often humorous) speaker on topics of interest to the profession and can be reached at jkowalski@kowalskiassociates.com

You Want Your Bonus? We Want Your Time Sheets.

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By David Lat
Above The Law

At large law firms around the country, associates and counsel are eagerly awaiting their bonuses. But partners and chief financial officers have their minds on other things: namely, collections. The fourth quarter is when firms step up their efforts at shaking down clients for cash.

As we all know from the law-and-economics reasoning that was taught to us in law school, people — yes, this includes lawyers — respond to incentives. At one leading law firm, bonus anxiety is being shrewdly harnessed in service of collections efforts.

CHECK YOU TIME SHEETS….

The firm is Quinn Emanuel. Here’s the memo that was sent out last week by Jacqueline Toth, the firm’s chief financial officer:

As we will be pulling data as soon as we close the month of November on December 2nd, at 5:00 p.m. (pst), there will be NO EXTENSION granted to enter late time. Time not entered by the deadline will not be included in the bonus data. Please make sure all your time is entered and finalized by the deadline.

The 2011 bonus structure has yet to be finalized. Once finalized, Richard Schirtzer will send an explanatory e-mail to associates and of counsel.

QUINN REMAINS… inflexible?

In all seriousness, the memo seems reasonable enough to me. It’s basically saying, “If you want your bonus, please get your time in, so we can bill the clients who are ultimately responsible for funding your bonus.”

But one Quinn tipster — who read the “yet to be finalized” language as “we’re waiting on Cravath” — was less approving:

Can you believe this s**t?

“We can kowtow to the market and will hang you out as long as Cravath doesn’t announce, but if you’re 15 minutes late with your time entries, you’re f**ked.”

Profits per partner second only to Wachtell Lipton, and they’re cowering in the shadows waiting for the market.

In defense of QE, however, doesn’t the firm need to know what the “market” bonus schedule turns out to be, so it can then swoop in and put that bonus structure to shame?

If Quinn announces its bonuses first, and then Cravath (and all the Cravath followers) announce better-than-expected bonuses, then Quinn might be forced to make a second trip to the money well (sort of like how it had to sweeten the June bonuses this year, in the wake of spring bonus mania).

But will Quinn actually put the Cravath/market-level bonuses to shame? Only time — entered by the deadline — will tell.

QUINN EMANUEL URQUHART & SULLIVAN — MEMORANDUM — BONUSES AND TIME SHEETS

From: Jackie Toth Date: Tuesday, November 15, 2011 To: Associates, Of Counsel Cc: Richard Schirtzer, David Henri, Allison Morgan

Subject: Bonuses – No Extensions for November Time

As we will be pulling data as soon as we close the month of November on December 2nd, at 5:00 p.m. (pst), there will be NO EXTENSION granted to enter late time. Time not entered by the deadline will not be included in the bonus data. Please make sure all your time is entered and finalized by the deadline.

The 2011 bonus structure has yet to be finalized. Once finalized, Richard Schirtzer will send an explanatory e-mail to associates and of counsel.

Thanks.

Communicating with Clients through Invoices


Gianfranco A. Pietrafesa
ABA Law Practice

Far too many lawyers do not know how to prepare time charges. They fail to appreciate that an invoice is a form of communication with a client. The contents of an invoice should be prepared with the same thought and effort as a letter to be sent to a client.

A time charge that merely states “legal research,” for example, is a missed opportunity to communicate with the client, and repeated time charges for “legal research” or “review and revision” of a document are likely to create misunderstandings by, and resentment of, a client.

When I review inadequate time entries in a draft invoice, I ask the responsible lawyers how they would feel if they received such an invoice. Would they understand the invoice and be willing to pay for the legal services? More pointedly, I ask them exactly what “legal research” was done and why it took the stated number of hours. They prove my point when they cannot adequately describe the legal research or explain the hours needed to do the work.

Most clients do not understand the work lawyers do. They do not understand that even when a lawyer knows a particular area of the law, a lawyer may still need to review the law and research the legal issues. They do not understand that a lawyer may need to review and revise contracts, briefs and other documents so that they clearly, concisely and persuasively express a client’s position or protect a client’s rights and interests.  Clients do not understand how much time and effort it takes to do legal work. The invoice is the opportunity to help a client understand.

The more descriptive the time charges on an invoice, the more likely a client will understand the work being done, the more likely a client will appreciate the effort being made on his behalf, and the more likely payment will be made. A lengthy description is not necessary. As shown below, a concise description will do the job.

  1. Telephone Conferences. The description “telephone conference with client” does not communicate anything worthwhile to a client. A client cannot be expected to recall one of many telephone conferences with his attorney. If the client is a business entity, the time entry does not inform the client who was involved in the telephone conference. A client will not be aware of telephone conferences between his lawyer and third parties. This type of time entry should read as follows: Telephone conference with John Smith on scheduling a meeting to prepare for his deposition.
  2. Correspondence. A description such as “review of letter,” “preparation of letter” or “email exchange with client” does not communicate anything to a client. These time entries should be more descriptive, as follows: Review of
    letter from attorney James Jones on proposed revisions to stock purchase agreement; or email exchange with client on proposed indemnification provisions in stock purchase agreement.
  3. Research. Time entries merely stating “research” and “continue research” are inadequate. If you were a client, how would you like to receive an invoice with such time entries without any explanation of the issues being researched by your lawyer? Research takes time. As a result, the amount of these time charges may be significant. A client being billed for research is entitled to know what issues are being researched by his attorney. These time entries need to describe the legal issues being researched, without belaboring the point. For example: Research case law to determine applicability of statute of frauds defense and laches defense; or continue research on statute of frauds issue.
  4. Preparation and Revision of Documents. These time entries are often ignificant, whether the lawyer is preparing a brief, memo or contract. The client is entitled to more than “preparation of brief” when receiving an invoice for several thousand dollars. These time entries need to explain what is being prepared or revised by the lawyer. Here are some examples: Preparation of draft of Statement of Facts, Procedural History and Point I of brief in support of motion for summary judgment; Review and revision of draft Statement of Facts; Preparation of indemnification provisions for stock purchase agreement; and Revision of indemnification provisions based on client’s comments.
  5. Attend to File/Review of File. Clients do not understand the need for lawyers to review and organize their files. Therefore, these time entries need to be descriptive: Review of file to determine deadlines for discovery from plaintiff.
  6. Dictation. It is more professional to use a description other than “dictation.” For example: Preparation of letter to attorney Jane Smith on deficient answers to plaintiff’s interrogatories.
  7. Appearances/Meetings Out of Office. These time entries should state what the lawyer was doing and where since a portion of the time charge will include travel time. For example: Appearance before Judge Smith at the Morris County
    Court House for oral argument in support of plaintiff’s motion for summary judgment; or Meeting with CEO at client’s place of business to discuss dispute with supplier.
  8. Conferences. Conferences among attorneys in the same firm need descriptive explanation so that clients understand they are not being charged for social conferences between attorneys. As an example: Conference with employment lawyer John Smith to discuss permissible scope of non-competition provision in asset purchase agreement under law.
  9. Review of Documents. If a lawyer reviews a letter, pleading, contract, etc., the time entry should be self-explanatory. However, if the lawyer is reviewing a document for a specific purpose, that purpose should be explained. For example: Review of deposition transcript of John Smith to select portions of testimony for inclusion in brief supporting motion for summary judgment.
  10. Photocopying. Clients should not be charged for a paralegal’s time making photocopies since that is a clerical task. However, a client can be charged for a paralegal’s time when the paralegal is doing more than simply making
    photocopies. The time entry must describe the services: Review, reproduce and assemble documents to be furnished to John Smith at the request of attorney James Jones.

Clients read invoices. An invoice is a lawyer’s opportunity to communicate with a client. It is an opportunity to explain the work being performed on behalf of a client. A descriptive invoice will help a client understand a lawyer’s work and likely ensure payment by a client.

____________________________________________________________________

Gianfranco A. Pietrafesa is a partner with Archer & Greiner, P.C., in Hackensack, NJ, where he handles business transactions and related litigation.  He can be reached at gpietrafesa@archerlaw.com. This article was inspired by the words of wisdom of his mentor, Frederick W. Rose, of Lindabury, McCormick, Estabrook & Cooper, P.C., in Red Bank, NJ.

Smart WebParts Offers Free Timekeeper Behavior Analysis

Program reveals metrics on unbooked hours, accuracy, compliance and more.

Smart WebParts

LOS GATOS, CA. –  September 13, 2011 – Smart WebParts (www.smart-webparts.com), the foremost provider of time capture + time entry technology for the legal industry, today announced the availability of its Timekeeper Behavior Analysis. It is available free to any law firm with over 50 attorneys.

The analysis is a set of Key Performance Indicators and Metrics developed by Todd Gerstein and David Gallagher. The analysis mines time entry data from the accounting system and calculates for each timekeeper:

  • Behavior Type: Contemporaneous or Reconstructionist?
  • Velocity: How fast do time entries get into the system?
  • Compliance: Is the timekeeper in compliance with firm due date policy?
  • Leaked Time: How much time has the timekeeper worked but not booked?

According to Todd Gerstein, CEO of Smart WebParts: “The Timekeeper BehaviorAnalysis will give law firms a keen understanding of their timekeeping business process, which ultimately gives them the opportunity to address shortcomings and improve processes. Understanding where a firm sits with regard to timekeeping is the first step toward improving accuracy, compliance and attorney buy-in.”

David Gallagher, who manages the UK office of Smart WebParts added “Everyone accepts the anecdotal evidence that late timesheets are not comprehensive, at times less accurate and often conservative in estimates of past activity duration.  For the first time our metrics can value the time leaks this behavior generates and clearly make the case for time capture”

Contact us to learn more about the program:

United States
Todd Gerstein
tgerstein@smart-webparts.com
415-668-8411

United Kingdom
David Gallagher
dgallagher@smart-webparts.com
0800 048 8571

About Smart WebParts

Smart WebParts, LLC (www.smart-webparts.com) provides innovative software solutions designed to help law firms and other professional services organizations maximize profits. The team consists of experts with more than 100 years combined experience in the finance, accounting, process engineering and technology industries. 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.

Smart WebParts Launches Smart Time Mobile for Smartphones

LOS GATOS, CA. – July 12, 2011 – Smart WebParts (www.smart-webparts.com), a leading provider of time capture + time entry technology for the legal industry, today announced the availability of Smart Time Mobile. The application enables attorneys to enter time directly on Smartphones via a mobile browser. Smart Time Mobile is available across all major Smartphone platforms including iPhone, Android, BlackBerry, Windows Phone 7, and iPad.

According to Todd Gerstein, CEO of Smart WebParts: “It is no secret that mobile usage is on the rise. Everywhere you go, you see people either chatting on their phones or walking with their heads down, fingers sliding across a little glass screen. Mobile devices connect people to the digital world whenever and wherever they please. With this release, Smart Time is now part of the attorney’s mobile ecosystem.”

Steve Bronstein, CTO of Smart WebParts, added: “Our design objective was to build a mobile application that is device agnostic. Users don’t have to download an application or any maintenance updates, but instead ‘call up’ a URL via their mobile browser, which instantly delivers the most up-to-date Smart Time application to their device. The URL can then be bookmarked like a local app on the device desktop for repeated use.”

Risk Management: How can you stop “fishing expeditions of curiosity” inside your timekeeping system?

 
T
odd Gerstein
CEO, Smart WebParts

Law firms today face huge amounts of risk, and the last thing you need is a mischief-maker inside the firm.  Law firm technology has made information easy to store, access and utilize, increasing the risk a bad seed in your firm is fishing for confidential data. While firms acknowledge their document management, records and enterprise search systems are vulnerable, enough don’t think about protecting their timekeeping system.

Most software applications intentionally make internal information easily accessible, which is usually a good thing for clients and attorneys, creating efficiency and a sizeable knowledge base. But open access to information has its own set of risks. Highly publicized breaches have appeared in the media, including breaches to data privacy rules like HIPAA/HITECH and insider trading non-compliance.  Not good.

So, what is the best way to wall off your timekeeping system? The simplest way is to make every timekeeper a silo, only able to see his or her own entries. That stops the snooping and fishing, but does not hide confidential client matter names from the user on client matter look-up lists.  Evidence suggests that prospecting for confidential names is where most mischief begins, so you want to protect your client matter list. So, the simple silo strategy has holes.

When we designed Smart Time, we designed it with ethical walls in mind. But first, you must have an ethical wall system in place or an accounting system capable of building and managing walls.  Ethical wall systems allow you to manage your walls in one central location. Once you set up a wall, these systems spawn security into other applications. I consider these systems a “must have” for firms sensitive to risk management.

We’ve concluded the best way to protect Smart Time is to build a custom client matter look up for each user and to only permit them to look at their own data.   We construct the list by reading the inclusionary and exclusionary walls in the ethical wall system. 

It works like this:

  • An inclusionary wall allows access to the client or matter. Only those timekeepers who have been granted access are permitted to interact with client matter data. For time entry that means only timekeepers who have been added to the inclusionary wall are able to see client/matter names and numbers on their look-up lists, and only they are able to post time to the matter.  Everybody else in the firm does not even know the client/matter exists.
  • An exclusionary wall prevents specified timekeepers from gaining access to particular client/matters. Timekeepers added to exclusionary walls do not know the matter exists in the timekeeping system and if they attempt to post time by accident, the system stops them,

It sounds simple enough, but not all time entry systems can accommodate wall security.  When you examine your risk management policies be sure to include timekeeping on the list of protected systems.

Timekeeping Enforcement: Culture, Behavior, Sticks & Carrots

By Todd Gerstein
CEO & Founder, Smart WebParts

You have a clear timesheet policy, a great time recording system and a firm full of hard-working attorneys. Why then, do you still need someone to be the timesheet “enforcer” and chase after people to turn in their timesheets on schedule?

Though attorneys find it painful to record their time, it is still essential to the business process. Primarily, of course, it is the first step in the billing process that turns hours into revenue. It also serves to aid the firm in delegating work assignments, evaluating employees, calculating profitability, gaining insight into operations and finding efficiencies.

So, why don’t attorneys submit their timesheets in on time? Two words: culture and behavior.

Culture & Behavior

Let’s tackle culture first. Some think the most effective way to achieve timesheet compliance is to make it cultural. Everyone, from accounting staff to assistants to the attorneys and partners, understands and accepts that it is a firm priority. No sticks or carrots—it’s just part of being at the firm.

Or, viewed from a slightly different angle: You have all the right tools, great people and clear policies, but if the firm environment and culture do not communicate that on-schedule timesheets are a priority, chances are good that late timesheets will endure as a problem.

I’ve observed that culture alone does not work in most firms. It’s not that your attorneys don’t want to submit their timesheets on time. It’s that their behavior is based on a sense of what’s most important.

For whatever reason, those who consistently turn in late timesheets have decided that on-schedule timesheets are not important. All you have to do is make them important. In other words, you change the timekeeper’s priorities by raising the stakes of non-compliance appropriate to how serious you are about wanting timesheets in on time.

So, what are your options for behavior modification? Sticks and carrots. What follows is what we have learned about timesheet enforcement at AMLAW 100 & 200 firms from firsthand experience, news reports, or input we have gotten from colleagues in the industry.

The Sticks Approach

Unfortunately, it is true that some people only respond when they feel pain. With that in mind, here are some “sticks” we’ve seen adopted in firms.

Pay Cuts

This approach hits delinquent timekeepers where it matters most: the wallet. We have seen two Biglaw firms recently expose their plans. From the Simpson Thatcher policy handbook:

Maintaining daily time records is very important to both the firm and our clients, as it directly impacts the firm’s ability to administer work assignments and to bill clients on a timely basis. If a lawyer is missing ten business days of diaries prior to any payroll date, the lawyer’s gross salary will be reduced by twenty percent prospectively for the next pay period. The reduced salary will continue in effect until diaries are no longer ten business days in arrears by a payroll date. Restoration to the prior salary will occur in the pay period following the pay period in which the lawyer’s time records are once again current, and retroactive restoration will only be made in exceptional and rare cases, such as in some situations of personal or family illness or emergencies, with such reimbursement to be approved in writing by a co-chair of the Personnel Committee. If a lawyer has any reason to believe that he or she will be unable to complete time records in compliance with this policy, the firm expects that the lawyer will raise the matter in advance.

Hughes Hubbard is the second major firm to have their timekeeping enforcement policy exposed in the press. The policy proposes irrevocable docks in pay for timekeepers whose time is more than five days late.  Here are the key paragraphs of the Hughes Hubbard policy:

 We are implementing a new approach to the issue of late time: if a timekeeper has more than five business days of late time prior to any payroll date, the timekeeper’s gross salary will be reduced by 5% in the first instance, prospectively for the next pay date. The reduction will be increased to 10% in the second instance and to 20% in the third instance and any subsequent instance. The reduced salary will continue in effect until the timekeeper’s time is no longer more than five business days in arrears by a payroll date.

There will be no retroactive restoration of a timekeeper’s reduced salary unless, in the discretion of the Chief Operating Officer or his designee after a showing of exceptional circumstances, the Chief Operating Officer or his designee approves an exception in writing. If a timekeeper has any reason to believe that he or she will be unable to complete time records in compliance with this policy, the timekeeper must communicate this in advance to the Chief Operating Officer or his designee.

In addition to pay cuts, we’ve seen these twigs added to the mix:

Cancel Direct Deposit

Cancel late timekeepers’ direct payroll deposit for six months.  Force the offender to go to the managing partner’s office to pick up their paychecks.

Cut Off Computer Access

If a timekeeper is late on timesheets, the IT department shuts down their computer. When they attempt to use it, every application is locked down except time entry. After they enter their time, they report it to the accounting department, who gives the IT department the high sign to turn the computer back on.

The Carrots Approach

If the positive approach is more your speed, these tactics have been implemented by other firms to motivate compliance:

Giveaways

Everybody loves “free.” This approach gets people to think of their timesheets as a means to an end.  At year end, Brown Rudnick offered its timekeepers a fun reason to get their time in for the year end close. Here is an excerpt of the Brown Rudnick memo:

1. Attend the Effective Billing Practices training on Monday, December 6th at 12:00 p.m. EST/5:00 p.m.GMT;

 2. Follow “best practices” for all timekeeping entries (as described in the December 6th training session); and

 3. Submit your time daily from December 6th – January 31st in accordance with our timekeeping policy.[Redacted] and his team of experts will determine whether timekeepers are following “best practices” (including submission of detailed, informative descriptions of the individual tasks performed and the amount of time spent on each). All eligible timekeepers will be included in a raffle for 24 iPads! Winners will be announced no later than February 7th.

The Disappearing Bonus

Here’s the positive spin on the wallet approach, and one which reminds employees, each week, that there is a consequence for their choices and behavior:

Each January, every employee begins the year with $1,000 in a special bonus account, payable at the end of the year. Each week where there is a missing timesheet, one hundred dollars is deducted. At the end of the year, whatever amount remains is added to the final paycheck.

Embed Compliance into Important Firm Metrics

This is the method I like best. A mix of culture, sticks and carrots. It came from a CFO at an AMLAW firm.

 We carefully monitor time entry — our policy is weekly (time through prior Friday due Monday; end of month due at the end of the first business day of the following month). The number of appearances on late time reports is a financial statistic that is considered along with all other metrics (e.g., billable hours, realization, etc.) at every opportunity — associate raises and bonuses, partnership consideration, partner compensation committee, etc. There are also economic sanctions to equity partners, both on a weekly and monthly basis.

It has taken us many years to obtain the buy-in and cultural acceptance of these policies. It is a very difficult but imperative process.

Conclusion

Given that most people aren’t usually motivated by firm culture alone, it’s my view that the most effective approach is a mix of culture, sticks and carrots. As you’ve seen from this post, there are many potential paths, each of which offers its own advantages and drawbacks.

The first challenge is to realistically appraise what your firm’s culture is, and whether you need to make any changes to that culture to get employee buy-in on new or changed policies. Recognize too, that for your attorneys, timekeeping is a painful process, so anything you can do to acknowledge and attempt to reduce their pain will go a long way toward achieving this buy-in.

Then, of course, you need to decide what compliance measure best fits your firm, and pursue it, expecting that it may be an experimental process that requires patience and tenacity.

Whichever path you go down, the key to an effective policy is embracing it at every level and remaining consistent regarding expectations and enforcement.  Changes in culture are some of the hardest to initiate, but can be some of the most worthy your firm can make.

Smart Time Case Study: Herbert Geer

One-on-One with Tom Haslam, Chief Innovation Officer

Tom Haslam, Chief Innovation Officer for Herbert Geer in Australia has been using Smart Time at his firm for just under a year. Smart WebParts recently talked to Tom, who says it has successfully met his targets for finding billable units of time, making timekeeping easier for attorneys and support staff, and for improving timesheet accuracy.

What were the business drivers for implementing a time capture solution? 

Our primary driver was to insure we rendered accurate client invoices. Smart Time facilitates the process by providing the attorney a detailed journal of their day’s activities. Besides improved transparency and accuracy, Smart Time also frees up time for the attorney to focus on our clients’ requirements rather than administrative tasks.

In addition, there was a desire to more accurately capture all of an attorneys’ time. So, the second driver was firm profitability, especially since we had a concern that people weren’t remembering all their activities and recording them.

The third driver was making it easier for people to do their job. One of a attorneys’ biggest complaints was having to complete a timesheet. Everyone approaches it differently and some do it better than others. Smart Time’s timesheet recording is easier because it reports what you’ve done and predicts what you’re going to record.

Did all attorneys benefit?

Yes. It’s not like the people who struggle with timekeeping get more benefit out of the system than the people who are really good at it. Learning the system is simple, easy to get started and the benefits are realized quickly.

For the attorney who only does timesheets once a month, they obviously get quite a significant benefit in terms of accuracy and recreating their timesheet more quickly.

Or, it might also be their secretary that gets the benefit. From what I’ve seen, it’s the high performers who have really taken to Smart Time. Also the really good secretaries will go to their partner and say, “Look, I hate having to do your timesheets at the end of the month, it’s always a mad rush.  Let’s start using Smart Time and it’ll be better.”  And then they teach the partner how to do it. 

So, far the attorneys really like the automated report function. I use it, and for me, I don’t even think about time recording during the day. The next day I run my report and fill in my timesheet in 10 minutes. It’s very accurate and I can then move on to the next thing.

 What are the key benefits of the system for the attorneys?

Number one, it makes it quicker for people who are trying to recreate their timesheet from scratch.

Two, it really helps people who are working out of the office. 

Three, it is a significant benefit for part-time people. On their day off they might take calls or review an e-mail for a special client, for instance. Previously that time might have been forgotten. Now, they get a report that includes all that time.

Four, it also helps really busy people who now don’t have to worry as much about their timesheet.

The last benefit, which is a funny one, is that the litigators have used it to prove or disprove whether they had a certain conversation on a certain day, if, for example, that’s being claimed by the opposing attorney.

Has the system increased booked hours?

This is a hard question to answer because you will never have two situations that are exactly the same. There are always differences, so it’s impossible to just change one parameter, i.e., introducing Smart Time and say, “Ah, yes it’s gone up by 3 hours.” That’s very hard to prove.

But having said that, the people who use the system tell me they think it’s increasing the number of hours they’re recording. And they are saying, “Yes, we think we are getting at least an extra couple of units a day.” To us, that sounds good. I certainly use that in my business justification for the product.

About Herbert Geer

Herbert Geer is a significant Australian law firm with offices in Melbourne, Sydney and Brisbane. The firm with over 330 people has committed to achieving intelligent and commercial solutions for clients through the application of industry and sector knowledge, technology and their first class legal skills.

www.herbertgeer.com.au

Smart Time Case Study: Fowler White Burnett

One-on-One with David Maloyed, Accounting Database Manager

An end to reconstruction, time leakage and the search for the “holy grail” of more billable hours – that’s what David Maloyed, Accounting Database Manager at Fowler White Burnett, was looking for in a time capture solution for his firm. Recently, we talked to David to discover his reasons for implementing Smart Time.

What were the business drivers for implementing a time capture solution?

We used Smart Time at my last firm. When I joined Fowler, I made the pitch to management that time capture software would reduce busy work, increase accuracy, and, the “holy grail,” find more billable time. The ability for a software product to create additional billable fees – now that’s something you don’t find in many products.

What I discovered at my last firm — and it is true here as well – that attorneys, by their very nature, tend to prepare their timesheets by reconstructing their day by looking at their e-mails, calendared appointments and phone logs. On average, a partner-level attorney spends 2-4 hours a week on the reconstruction process. With Smart Time, they get a report every morning listing what they did the prior day. They don’t have to reconstruct — it’s all right there for them.

Besides saving time, Smart Time cleans up the timekeeping process and shuts down time leakage. Time capture reports jog the timekeeper’s memory to make sure they book all of their hours. The simple act of closing the leak increases hours. That’s how time capture works.

We took one of our problem people and figured out if she billed five more hours per month, it would pay for the product for the whole firm. It was kind of like, “Where do we sign and how soon can we get it installed?” It was a no-brainer.

How did you go about selecting a vendor?

Besides Smart Time, I looked at three other time capture products and either they were outrageously priced (six figures to get my foot in the door, which is absurd) or the attorneys didn’t like the user interface. I can tell you from experience, if the attorney doesn’t like the interface, it doesn’t matter how good the software is, they’re not going to use it. Smart Time scored highest on usability.

How did the implementation go?

From a technical standpoint, implementation went really smoothly. We had everything resolved in about 10 days. E-mails and appointments are mined from our Microsoft Exchange system. Rather than grab phone calls from our switch we went directly to our nQueue Billback cost recovery system, which gives us inbound and outbound calls. Mobile calls are secured from our Blackberry Enterprise Server. We had some technical challenges with documents, but Smart WebParts found a way to make it work.

How did you deploy Smart Time?

We did a Lunch ‘n Learn introduction for our early adopters on a Thursday. I started checking in with them the following Monday to see if they had any questions. By Friday, all 15 were up and running. So, we got everybody in the first group trained and live in one week, which is saying a lot.  For the rest of the firm we are installing the product virally. We are leaving it up to our first users to do the PR push for us. Our first users are very excited and have been spreading the word to their colleagues. Attorneys are contacting me and saying, “We want to be in the next round, when’s it going to be, do we have to wait?”  Everybody agrees we should have done this sooner.

What feature do the attorneys love best?

Besides eliminating the manual reconstruction process, the attorneys love the block feature. It is part of the learning system that allows users to associate e-mails, phone numbers and such to a client and matter. The block feature allows users to permanently hide numbers, like phone numbers from their spouse or kids’ cell numbers, so that they don’t come up every day in their report. They know they’re not going to bill it, so by blocking it one time, it never shows up again and reduces what they’ve got to look at on a daily basis when they prepare their timesheets. That’s the “smart” in Smart Time. It learns, and the more you teach the system, the better it works for you.

What’s it like working with Smart WebParts?

I can call them and say, listen, this isn’t working for us, what about X? And they say, “We can probably do that.” With most vendors, “We can probably do that” means they’ll put it on the board and in six months maybe they’ll talk about it. But with these guys, I get updates in 30 days.  You just don’t get that from other vendors. The level of service is beyond reproach.

How have your attorneys adapted to the system?

With Smart Time’s straightforward interface, the attorneys quickly adapted to the system. It was a 15-minute training session and they were off to the races. We barely get a support call. The product is solid. Attorneys are reporting back to us that it is taking them less time to prepare their timesheets and they are finding more time to book. Everybody is happy.

Hughes Hubbard Is the Latest Firm to Crack the Time Keeping Whip

From Above the Law
By Elie Mystal

I find it funny that firms that want to skimp on bonuses also expect associates to make sure they are helping the overall health and performance of the firm. At some level, why should associates care if the firm is up to date on its collections? It’s not like that money is going to trickle down to the time keepers once their hours are realized. Hell, we’ve got people in the comments claiming they are going to purposely underbill in order to hurt firms in 2011 for stinginess in 2010.

The firms aren’t wrong to be doing everything they can to get associates to enter in their hours in a timely fashion. Time keeping is more accurate when you do it every day (as opposed to trying to recreate your days at the end of the week or month). Firms are struggling to collect from their clients. And, for what it’s worth, billing hours is part of the job for attorneys. I just find it ironic that firms are trying to pressure their associates to produce more money for them even as they are sharing a smaller percentage of those profits with associates.

It’s pretty clear that being a part of a Biglaw firm isn’t a “team” proposition. Everybody for themselves; that’s how the partners act, and that’s how partners expect associates to act.

And so Hughes Hubbard is bringing a little personal punishment to associates who are late with their time…

If you’ve been following along with Above the Law, you know that a number of firms have stepped up the pressure on associate time keeping. Simpson Thacher, defenders of the cheap Cravath bonus scale, got the ball rolling back in November, by threatening to dock the pay of associates who were delinquent with their billable hours.

Then Steve Pesner of Akin Gump sent out an email (an email that still hasn’t been repudiated by Akin Gump management) threatening the livelihood of all the associates in his department. Later, Brown Rudnick tried the “get more flies with honey than with petulant screaming” tactic, by offering to raffle off free iPads for time keepers who were up to date with their time.

The Hughes Hubbard plan is along the lines of STB’s: punishing delinquent timekeepers with pay cuts. Hughes Hubbard is proposing significant, irrevocable docks in pay for people who are more than five days late in entering their time. The new rule is buried in a lengthy firm-wide email touting the virtues of a new timekeeping system. Here’s the pertinent part:

We are confident that the new Elite Webview time system will make it even easier for the Firm’s timekeepers to enter their time on a contemporaneous basis. To compliment that new system, we are implementing a new approach to the issue of late time: if a timkeeper has more than five business days of late time prior to any payroll date, the timkeeper’s gross salary will be reduced by 5% in the first instance, prospectively for the next pay date. The reduction will be increased to 10% in the second instance and to 20% in the third instance and any subsequent instance. The reduced salary will continue in effect until the timekeeper’s time is no longer more than five business days in arrears by a payroll date.

There will be no retroactive restoration of a timekeeper’s reduced salary unless, in the discretion of the Chief Operating Officer or his designee after a showing of exceptional circumstances, the Chief Operating Officer or his designee approves an exception in writing. If a timekeeper has any reason to believe that he or she will be unable to complete time records in compliance with this policy, the timkeeper must communicate this in advance to the Chief Operating Officer or his designee.

The new policy will become effective on January 1, 2011 in all of our U.S. offices (save for Los Angeles, which is implementing a different program to address the late-time problem).

Damn. Up to a 20% reduction, with no restoration absent a written exception? Hughes Hubbard is like the not f**king around crew.

However, according to the Hughes Hubbard associates committee, “this not f***ing around thing is about to go both ways.” Here’s the response from the associates committee:

Dear colleagues:

The associates committee will be collecting questions about the new time policy described in the [prior] email. Please read that email and the new policy carefully. In addition to being sent during a week when most people are out, the headline is buried deep in the fourth paragraph.

In short, the firm has a new policy of reducing your salary for late time entries. Late is defined as five days. The salary reductions can cut as deeply as 20% of your gross pay. The policy is going into effect as of January 1, 20111 except in our LA and Paris offices (because the policy is illegal in those jurisdictions). You will want to ensure that your secretary gets your time in promptly and no longer enters it in batches.

If you have any questions about the policy that you would like for the associates committee to raise to the partnership, please send them to me and I will pass them on.

They sound pissed.

But really, what are they going to do? You’re supposed to enter your time, on time. You can bitch about it, but at the end of the day you exist to make money for the firm. All you can really hope for is to work for a firm that will reinvest some of those profits back into your bank account.

And if you really want to work for a place like that, you should probably send in a résumé to Cahill or Kirkland or Boies or some other firm that pays top of the market bonuses.