The biggest problem in law firms (in my view) is that most lawyers went into law to solve client problems – many passionately believing in the law to protect the vulnerable.
New lawyers generally struggle with the whole commerciality of what a law firm is about. They want to spend as much time as is needed to ensure a client gets the best result – but the reality is that firms have to pay wages which means getting invoices in and clients paying their bills to do that. And to an extent, having to be pragmatic about how the work is done to balance client satisfaction with getting money in to the firm.
The standard approach for managing the process is to measure an individual’s billing hours against targets – but what happens when they don’t hit them? The arguments tend to revolve around the reality of the targets, rather than helping to achieve them.
The traditional way of managing performance in a law firm is for partners meetings, board meetings or head of department reviews to occur once a month with a pile of papers with all the figures from the previous month’s billing and utilisation. Typically the papers land at the end of the second week of the month.
The reality is that half the attendees won’t read the papers at all and the other half will read them (how much time does that take?) but can do little about it. They missed the target last month – it’s been and gone.
So how can this be turned on its head?
How about the managing partner or finance director coming down the corridor, say, five days before the end of the month to say “You are behind target, what can be done?” And perhaps even, “What can we do to help you?”
Five days before the end of the month – is that enough time still to do anything about it?
Phil J Shuey writes on Law Office Management Techniques for improving your work environment for American Bar and says, “If the attorney can recapture control of his or her professional day, then the quality of professional life will be enhanced. For better professional time management, organize the day’s activities at the start of each day.” This article was written back in 1996 but how much of it still applies to your firm?
He is actually looking at the practicalities of managing work on a daily basis – but all this links back to ensuring work is planned, done and billed. And this bit about ‘recapturing control of the professional day’ is important – letting the lawyer know where they are with the client on a daily basis so they can focus on both the client and what needs doing to hit their billing targets.
The best way to do this is to have a dashboard for each lawyer which is updated daily. More or less in real time, these can show work done to date, work billed, utilisation and so on by individual lawyers.
Progressive firms are now moving to bill as you go, once the work is finished, then a bill is raised – and some are now looking at invoicing on say, the 10th of every month. This smooths out workloads across the firm – from the lawyers themselves to the accounts teams, support services and the eventual client chasing by credit control – rather than that classic end of month frenzy which stresses everyone in its path.
Sally Kane in Legal Careers gives advice to new lawyers to familiarise themselves with client billing policies. She says: “Every client has its own billing policies and procedures. These policies are often contained in the client’s retention or engagement letter. These billing policies may set forth staffing limitations, budgetary guidelines, disbursement policies and specific timekeeping guidelines.”
Interestingly, she doesn’t mention the gem that could help a firm to get paid quicker – asking the client on what days they make their payment runs. As an example, many public sector organisations do a run on the 20th of every month – so getting an invoice in on the 15th of every month could give a practical solution allowing time for approval and making the run earlier than invoicing at the end of every month. And again, this is helping to get away from the end of month treadmill.
The point of all this is that if you want to improve the billing of an individual lawyer, giving a thick pile of accounts to team heads every month to tell them they failed, is not the way to do it. Instead, giving the lawyer information on a daily basis as to how they are doing against targets allows them to manage their own work.
Have you seen firms move away from ‘monthly report’ management to giving more data and responsibility to individual lawyers? What results did you see?
Law Firm Practice Management System and Business Intelligence expert. Managing Director of Katchr.
If you’d like to discuss how large or small law firm software and legal financial reporting systems could help you run your practice more profitably, please give me a call on 03333 010 766.