The Importance of Efficient and Contemporary Management of Billable Time in Legal Firms
When it comes to successfully managing the financial side of a legal office or law firm, there’s nothing more important than reliably keeping track of billable hours and client invoicing.
Managing billable time efficiently is integral to keeping the doors open and the lights on, and the need for it can literally be existential; whether you’re a seasoned attorney or just starting your practice, the ability to track and manage billable hours contemporaneously can make or break you. As noted in Clio’s 2021 Legal Trends Report, in that year, the average lawyer only billed 2.5 hours (31%) of an average 8-hour day, with 16% of those expensive billable hours going completely unbilled… i.e., work done for free.
In a fast-paced legal world, time is money. To thrive in the competitive landscape, you need to maximize every hour. So, how can you achieve this? The key is contemporaneous time tracking.
Contemporaneous time tracking isn’t only about billing accuracy; it can be a game-changer for your firm’s profitability. Research shows that professionals who track their time in real-time capture up to 30% more billable hours compared to those who reconstruct their day in the end. In an industry where every hour counts, this difference can significantly impact your bottom line.
But does this issue deserve more attention? Actually, when you look at it closely, you may decide this is the issue that deserves ALL the attention. Over time, traditional manual time-tracking methods tend to devolve and become less efficient as earnest workers and management grow complacent with their system. Yet while manual tracking methods have some merits, legal work is often comprised of numerous different types of time expended across a wide horizon of disparate tasks, leading to a tendency of certain categories of support work (communications, note taking, research, file maintenance) time can slip through the cracks. And billable time that isn’t tenaciously recorded is money lost… money that may be the lifeblood of your practice.
As recently as 2023 nearly two-thirds of the workday was still underutilized with respect to billable client work. Meanwhile, collection rates fell to 87% by the end of that year, leaving firms struggling to get paid.
But accurate record-keeping and billing may be the answer. 15% of clients who failed to pay said they never received a bill from their lawyer at all, while a full 28% of those who hired a lawyer said they waited a noticeably long time to receive their bill. Better time tracking and increased billing efficiency would certainly help reduce billing confusion and get payment back on track.
Overcoming Challenges in Implementing Contemporaneous Time Tracking
Efficient time management sounds great, but how do you overcome the challenges of implementing contemporaneous time tracking in a legal setting? Many attorneys face resistance to change, concerns about disrupting workflow, or uncertainty about the right tools. In such cases, it may be helpful to seek expert technical help to address these challenges head-on and provide practical tips to seamlessly integrate contemporaneous time tracking into your legal practice.
- Choose the Right Software
Select a reliable time-tracking software specifically designed for law firms. Options like Clio, TimeSolv, or Centerbase offer features tailored to legal professionals. - Standardize Time Entry Codes
Establish a standardized set of codes for different tasks, matters, and activities. This consistency ensures accurate tracking and easy reporting. - Utilize Timer Features
Take advantage of timer functionalities within the software. Make proper use of start and stop timers for tasks to automatically capture real-time billable hours based on active employee schedules. Such automation helps minimize manual data entry errors. - Set Reminders for Time Entries
Encourage users to set reminders for time entries at regular intervals throughout the day. This helps to keep system users mentally “on the clock,” encouraging them to capture billable activities promptly. - Integrate Calendar and Email Systems
Integrate the time tracking software with calendar and email systems. As with using timer functionality (see above), this integration enables the automatic capture of billable time associated with meetings, appointments, and correspondence.
Implementing a new system can be met with skepticism, especially in a field where established routines and long-held bad financial habits are deeply ingrained. However, the benefits of contemporaneous time tracking far outweigh the initial discomfort.
Leveraging Technology for Seamless Time Tracking
With the advancements in legal tech, choosing the right tools for contemporaneous time tracking is crucial. How can you leverage technology to make the process seamless and efficient? In the age of integrated systems, the right technology can be a game-changer. From mobile apps to cloud-based solutions, modern tools can simplify time tracking while providing valuable insights into your work patterns, ensuring that they enhance, rather than hinder, your daily workflow.
Here are a few tips and tricks to keep in mind when implementing a new cohesive time-tracking system:
Mobile Accessibility:
Opt for software with mobile accessibility. This allows lawyers to track time on the go, ensuring that billable hours are not missed even when away from the office.
Implement User Training:
Arrange for thorough user training on how to operate the time-tracking software efficiently. This includes understanding features, shortcuts, and best practices.
Regularly Review and Analyze Reports:
Schedule regular reviews of time-tracking reports. Analyze trends, identify areas of improvement, and ensure all billable hours are accounted for.
Client Collaboration Tools:
Choose software that allows clients to access relevant time entries. Transparency fosters trust and helps clients understand the value of legal services.
Secure Access Controls:
Implement strict access controls to ensure only authorized personnel can modify time entries. This enhances data accuracy and maintains the integrity of billing records.
Automate Invoicing Processes:
Choose software that integrates with billing systems to automate the invoicing process. This reduces administrative overhead and ensures timely billing.
Regularly Update Software:
See to it that the time-tracking software is kept up to date with the latest releases. Updates often include improvements in features, security, and overall performance.
Track Non-Billable Time Separately:
Distinguish between billable and non-billable time. This distinction is essential for evaluating the profitability of different types of work and making informed business decisions.
By implementing these tips, law firms can enhance their billable time-tracking processes for increased accuracy, efficiency, and transparency.
Balancing Contemporaneous Tracking with Client Engagement
Client engagement is the lifeblood of any legal practice, and it can be disastrous to insert a clumsy time management and billing system that delays or interferes with client communication and interaction. Worse, no one wants to sit in a room with a supposedly sympathetic, engaged legal advocate while an ever-present clock runs obnoxiously in the foreground like the fare meter of a taxicab, ticking away seconds and visibly displaying the increase of the next billing invoice in real-time.
It can be difficult to balance contemporaneous time tracking with the demands of client interactions and casework. Understanding the delicate balance between meticulous timekeeping and client relationships is essential. There are numerous tracking systems that can be implemented, and by correctly connecting them to function seamlessly and automatically in the background (well out of view of the client), there doesn’t need to be even the slightest hint that every second is being recorded for accurate billing at day’s end. Which is one less distraction (and cause of worry) for the client to deal with.
Overcoming Resistance and Fostering a Time-Tracking Culture
Resistance to change can be a common hurdle in implementing new practices. “But this is how we’ve always done it before” can signal the death knell for improvement, hobbling all forward movement toward better and more efficient tech. It can be difficult to overcome resistance and foster a culture where contemporaneous time tracking is embraced by everyone in your firm. By understanding the psychology behind resistance and implementing proven strategies, you’ll be on your way to transforming time tracking from a hit-or-miss manual chore into a simple, automated part of your firm’s daily routine.
Analyzing Data for Strategic Decision-Making
Contemporaneous time tracking improves billing accuracy and provides valuable data for strategic decision-making. You can and should leverage the insights gained from time-tracking data to optimize your firm’s operations. It is also possible to use those analytics to better target your team’s daily routine to maximize billable hours and service clients in an ever-more efficient way. Implementing a computer-based contemporaneous time-tracking system can also bring the power of timeclock data analytics to your firm’s business calculations, allowing you to make use of your time-tracked data to make informed decisions that drive efficiency and profitability.
Paragon Provides the Solution: Let Us Help
By focusing on the elimination of bottlenecks and disorganization in your law firm, Paragon Tech can provide a comprehensive technology assessment to determine your time-tracking needs and execute a strategy to track all your billable client hours efficiently and effortlessly.