Do Associates Intentionally Underreport Chargeable Time?

Smart Time Solves a Mystery, Revealing Hidden Timekeeping Behaviors and Motives

What would you say if I told you that some timekeepers intentionally underreport their time? I’d never thought about it as a possibility, since in most law firms putting up big hours is a badge of honor. Why would anybody underreport their time?

Who Knew?

When a law firm uses Smart Time, our timekeeping system, beyond its original intent, you can bet it gets our attention. If you see something once, it’s merely interesting, but see something twice? That’s when I ask, “What’s going on here?”

We’ve studied and helped firms build time entry due date compliance policies. But the issue of underreporting or “eating” time had never crossed our radar.

However, recently, two of our clients told us how they used Smart Time: to find out if associates intentionally underreport chargeable time and why.

In my writings, I’ve talked extensively about timekeepers who underreport or leak time because they had trouble remembering, at the moment they prepare their timesheets, what they did. But intentional underreporting? That’s another beast.

A Little Detective Work

What happened is that the firms ran time captures for a month for each timekeeper. The time captures reported what the timekeeper did, when they did it and how long it took. They then compared the time captures to the actual hours booked, looking for patterns of missing time.

The first finding both firms reported to us is that younger and less experienced associates tend to underreport more time than experienced associates.

When the firm’s management spoke to the offending associates, they first confirmed the behavior and then asked, “Why?” This is what they learned:

  • Associates underreported time in order to make superiors think they were more competent than other associates in the same class – which they hoped would lead to better assignments.

  • Associates underreported time to take pride in meeting the time allotted by their superior to complete the assigned task.

  • Some associates reported that the billing partner on the matter told them to do it.

I’ll leave it to you to play industrial psychologist to figure out what this all means. I think it has a lot to do with associates gaming competence and partners bullying young associates. But, whatever it means, it’s not a healthy process.

Let Nothing Escape

Let me make this clear. Everybody should record everything they did without judgment. Let the billing partner, at prebill time, decide what gets billed and what gets written off. Complete and accurate timesheets should be at the foundation of your timekeeping policy.

Smart Time Apps Announces Smart Time Integration with Aderant e-Rainmaker®

Campbell, CA – September 18, 2014 – Smart Time Apps, the provider of Smart Time, today announced that Smart Time, its flagship timekeeping platform, has successfully been integrated with the Aderant e-Rainmaker® time and billing system.

Smart Time is an all-in-one timekeeping platform for law, accounting and professional services firms. The Smart Time timekeeping platform includes time entry, time capture and mobile modules. Any one of the modules can be installed independently or together to create a complete timekeeping platform. Smart Time enables firms to effectively collect, track and recoup billable time, thereby increasing revenue and profitability.

“Smart Time is billing system agnostic,” said Steve Bronstein, co-founder and Chief Technology Officer of Smart Time Apps. “We recently completed three installations at Aderant e-Rainmaker® sites. At two sites we installed the complete Smart Time platform. These sites were interested in extending the life of their time and billing system by installing a fresh time entry front-end for their attorneys. The third site installed Smart Time mobile to give anywhere, anytime time entry access to their attorneys.”

“Smart Time is more than just a time entry tool—it’s a business tool built by people with real experience in law firm finance and operations,” said Smart Time Apps co-founder and Chief Executive Officer, Todd Gerstein. “Often the timekeeping process is broken or ineffective. It can happen for many reasons, from poorly functioning legacy time entry software to process and compliance problems. We’ve developed a solution that results in greater revenue, less pain and total mobility. Smart Time supports every timekeeping behavior, all while ensuring complete, accurate and easy-to-complete timesheets.”

About Smart Time Apps

Smart Time Apps (formerly Smart WebParts) creates software solutions that maximize profits for law, accounting and professional services firms. Our flagship product, Smart Time, is an all-in-one time management platform. Our team of experts specializes in finance, accounting, marketing, process engineering and technology. We utilize best-of-breed technologies, as well as the most advanced tools and production processes. We have built a dedicated team, who offer solutions that are unique in the industry. Smart Time Apps is privately held and is headquartered in Campbell, California. http://www.smartwebparts.com.

Disclosure: Aderant e-Rainmaker is a trademark of Aderant Holdings Inc. and is not affiliated or associated with Smart Time Apps.

Top Three Timekeeping Metrics Every Law Firm Should Measure

We Built Smart Time with These In Mind

What timekeeping metrics should you measure? Here’s our offering: a list of the top three metrics absolutely every law firm should be tracking. And, we believe that this information should be made available to both the timekeeper and management. After all, if there isn’t a feedback loop within the firm based on those metrics, what point would there be in measuring?

1. Hours Booked: This is the classic timekeeping measure for law firms. How many billable and non-billable hours did the timekeeper book? Some call this metric a measure of productivity, which might be debatable. But it does shed light on how hard the timekeeper is working. It also shows how many hours a timekeeper has worked that can be converted into revenue.

While most firms track booked hours for the current month and year-to-date, we have also seen firms track hours for 18 months rolling, in order to see longer-term trends. If you set budgets (and I highly recommend you do), be sure to show the variance between hours worked against budget, and be sure your timekeeping system puts these stats in front of the timekeeper. We’ve seen that the mere presence of monthly and annual budgets helps increase booked hours. I am always amazed at how many firms don’t have clearly stated budgets, but ones tentatively said with a whisper.

2. Month-End Late Time:  You’ll want to look closely at how many hours the timekeeper books after the month-end close, and also how many hours miss the monthly billing cycle. All the research into law firm profitability shows that hours booked and billed months late have a lower profitability realization rate. It’s clear that month-end late time is a sure way to lose revenue you’d have otherwise realized. In fact, we’ve seen this number as high as 7% in some firms. Management must work to bring month-end late time down; these stats are a surefire way to make your managing partner crazy. (Give the dog a bone.)

3. Time Entry Velocity:  This measures how quickly time entries get recorded into the system, or, in other words, how many days after doing the work that the timekeeper enters hours into the system.

This one’s important, so let’s dive deeper into the math. Velocity = the difference between the work date and the entry date. So, when velocity = 0, the timekeeper worked and booked time on the same day. When velocity = 2, the timekeeper put in a full week of time into the system on Friday. If velocity = 15, that means the timekeeper is putting all their time in at month end.

Now, the right way to measure velocity is to score every time entry and then average it to get an overall score for each timekeeper. This score transmits their behavior. If a user averages a score between 0 and 1, they are a “contemporaneous” timekeeper, meaning they enter time on the same or next day. To support this type of timekeeper, you must have contemporaneous timekeeping tools like rapid time entry screens and timers.

If a user’s score is greater than 2, they are a “reconstructionist” timekeeper, meaning they are attempting to recreate their day by looking at emails, phone calls, appointments and such to reconstruct their time entries days after the fact. This type especially benefits from time capture technology, which provides the user a journal (derived from electronically monitoring the timekeepers) of what they did, when they did it and how long it took.

Besides identifying behavior, velocity also measures timekeepers’ compliance against the firm’s time entry due date policy. Here, you’ll want to measure the difference between the policy score and the individual’s score. For example, if the firm’s policy is that time for the week must be entered by Friday, the compliance policy has a score of 2. If the user has a velocity score of 3, it means they are not in compliance.

Most likely you know who your late timekeepers are, and this measure gives you a way to quantify it.

So there you have it—the metrics that will give you insight into your timekeepers’ behaviors, and thus, your firm’s inner workings. (Or not-workings, as the case may be.)

With these in hand—reported to you in Smart Time—users and management can come together to better steer the ship toward timekeeping compliance and greater profitability—all with greater simplicity and ease.

Murchison & Cumming Deploys Smart Time Mobile to Modernize Attorney Timekeeping

Smart Time – Proven, Accessible Mobile Time Entry for Law Firms

Campbell, CA – August 11, 2014 – Smart Time Apps, the provider of Smart Time, today announced that Murchison & Cumming, an AV-Rated AmLaw 500 litigation law firm with more than 90 attorneys with five offices in California and Nevada, has deployed Smart Time Mobile to its attorneys to modernize client timekeeping.

Smart Time Mobile enables timekeepers to enter and submit time anywhere. It provides timekeepers real time access to their time entry information. Users can run reports, see calendars and view time statistics. Timers are available for the user who wants to keep track of their time contemporaneously. Native applications are available for the iPad, iPhone and Android devices.

“Earlier this year, we undertook the initiative to improve mobile timekeeping. Our legacy mobile time entry system had become outdated. It was not meeting the needs of our attorneys,” said Jean Lawler, Senior Partner of Murchison & Cumming. “We reviewed several systems and quickly picked Smart Time. We particularly liked the Smart Time iPad user interface and the tight integration the app has to our accounting system.”

Smart Time Mobile can be deployed as a standalone package for firms that want to add mobile time entry to their current timekeeping environment. Or, it can be combined with Smart Time’s browser time entry and time capture modules to create a complete timekeeping solution. Smart Time can be deployed on-premises or hosted in the Smart Time cloud.

According to Steve Bronstein, CTO and Founder of Smart Time Apps, “Smart Time is a best built application that directly integrates with different accounting systems. Smart Time integrations include: Aderant Expert, Rainmaker, Thomson Reuters Elite, Prolaw, LexisNexis, Juris, PCLaw, Microsoft Dynamics and other leading accounting systems. At Murchison & Cumming Smart Time is tightly integrated to the firm’s Aderant Rainmaker accounting system.”

“We are pleased to add Murchison & Cumming to our growing Smart Time customer base,” said Todd Gerstein, CEO and founder of Smart Time Apps. “We look forward to supporting the firm’s ongoing success with Smart Time.”

About Murchison & Cumming LLP

Murchison & Cumming is an AV-rated AmLaw 500 “Go To” law firm for litigation in California and Nevada. We represent domestic and international businesses, insurers, professionals and individuals in litigated, non-litigated and transactional matters. With more than 90 attorneys in our five offices, we are large enough to provide clients with the resources of a large firm while ensuring the level of personalized service one would expect to receive from a small firm, including being able to respond quickly to client emergencies, cutting edge legal issues and developments in the law. We are known and respected trial attorneys and have an appellate record that includes precedent-setting decisions. For more information visit www.murchisonlaw.com.

About Smart Time Apps

Smart Time Apps (formerly Smart WebParts) creates software solutions that maximize profits for law, accounting and professional services firms. Our flagship product, Smart Time, is an all-in-one time management platform. Our team of experts specializes in finance, accounting, marketing, process engineering and technology. We utilize best-of-breed technologies, as well as the most advanced tools and production processes. We have built a dedicated team who offer solutions that are unique in the industry. Smart Time Apps is privately held and is headquartered in Campbell, California. www.smartwebparts.com.

Fullbright & Jaworski’s New Time Entry Policy

We know, from our research and discussions with firms, that 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.

Fullbright & Jaworski, a member firm of Norton Rose Fullbright, just announced its new timekeeping policy to “minimize unnecessary loss of billable time due to delayed time entry” for US Non-Partner Timekeepers.

Apparently, the firm has determined that the stick is mightier than the carrot. Here is a copy of the memo:

TO:          US Non-Partner Timekeepers
FROM:    Management Committee
RE:          Time Entry Policy for Attorneys Manual
DATE:     July 17, 2014

Entering time daily has been demonstrated to yield a 10% to 15% increase in utilization immediately. A compelling example of this occurred recently as the St. Louis office, under Jim Wiehl’s leadership, implemented a mandatory daily time entry policy, which yielded a 10% increase in utilization in the month adopted. The St. Louis office now has the highest utilization in the firm.

Accordingly, the Management Committee and the Partnership Committee have approved the following changes to our time entry policy to minimize unnecessary loss of billable time due to delayed time entry. Each timekeeper’s adherence to this time entry policy will support the Firm’s ongoing efforts to increase our productivity and profitability.

1. Attorneys should record their time on a daily basis.

2. Time Diaries for Mondays, Tuesdays and Wednesdays must be entered and released no later than 9 p.m. (Central Time) the following Thursday; and Time Diaries for Thursdays, Fridays, Saturdays and Sundays must be entered and released no later than 9 p.m. (Central Time) the following Monday.

3. A Practice Leader may grant an exemption for any release period to a timekeeper who is not able to submit time in conformity with the policy of the Firm. Exemptions will be granted in exceptional circumstances. If two exemptions have already been granted during the calendar year, requests for additional exemptions must be submitted to the Group Head.

4. Only time that is timely entered in accord with the policies of this Firm will be counted for any bonus to be awarded to associates or senior associates based on hours charged during the year.

Although point #4 may sound draconian to connect time entry compliance to associate bonuses – we bet it works.

The Importance of Specificity

 

paigephotoDavid Paige
Managing Director, Legal Fee Advisors
Special Guest Post

A fee award in a recent case in the Eastern District of New York, Claudio v. Mattituck-Cutchogue Union Free School District, provided examples of several common problems with attorney billing records.  Though the court found that the attorney’s hourly rate of $395 was reasonable, the court significantly reduced the number of hours billed because of “substantial problems” with the billing records.

The attorney billed half an hour for all but one of 68 phone calls between the attorney and his client.  The court found it “inconceivable” that each of these calls had taken half an hour.  In fact, based on its review of the attorney’s records, the court determined that attorney had billed half an hour for any task that took one-hour or less—including a pre-trial phone conference that lasted four minutes.

The attorney had also billed excessive amounts of time for other relatively simple tasks.  For instance, the attorney billed two hours for a two-sentence letter.  The court noted that it was possible that the attorney performed other tasks during the time billed.  If so, the attorney’s failure to specify these tasks on the billing records constituted block billing.  In any event, the court found the number of hours billed “unreasonable.”

Time spent on court appearances also appeared to be overbilled.  For example, the attorney billed 3.2 hours for an oral argument that lasted 47 minutes (not including preparation or consultation with the client, which were each billed separately).  The court conceded that the attorney’s billing entries could have included travel time, but noted that fees charged for travel time should be at half the attorney’s normal rate.  Because the court was unable to determine how much (if any) of the attorney’s billable hours were due to travel, the court found an across-the-board reduction was warranted.

Due to the problems discussed above and the “vagueness” (not further explained in the opinion) of some billing entries, the court reduced the attorney’s hours billed by 33%.

This case highlights the importance of specificity in billing entries.  For example, the court noted that the attorney might have performed other tasks during the apparently excessive blocks of time billed.  If so, and if the attorney had described those tasks, the court may have been less inclined to find the time billed excessive, even if the entries were block billed.  Similarly, the attorney could have been more specific in describing how much of the time billed for court appearances was actually spent on travel and perhaps added more detail to the other “vague” entries described in the opinion.  If the attorney had provided such detail, it is quite possible that he could have avoided the across the board reduction implemented here.

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David Paige is the Managing Director of Legal Fee Advisors, www.legalfeeadvisors.com.  David can be reached via email at dpaige@legalfeeadvisors.com.  David is among the nation’s foremost experts on the propriety of legal fees and billings. Over the course of his 25-plus-year career, David has guided Fortune 1000 companies on the some of the most complex and high-stakes billing issues and helped them develop the methodologies for achieving significant reductions in outside legal costs. In addition, he has served as a testifying expert in legal fee dispute cases.

 

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.