Improving Billing
Productivity
By Art Italo
Note: This article was written
with the small firm and solo practitioner in mind, but it contains ideas that
are easily translated to a busy partner in a large firm.
One of the great challenges in a small law firm or solo practice is maintaining billable hours at a productive level. While large firms have enough support to allow partners to easily bill 1800 to 2000 hours per year, smaller firms and solos are faced with extra administrative duties and distractions that make it difficult to bill even 1500 hours. Contingency lawyers in small environments often feel like circus jugglers between client calls, settlement negotiations and trials, not to mention the frequent cash flow challenges that can occur between fees.
Whether you bill by the hour or on contingency, your ability to earn is going to be directly related to how much time you have to spend on matters that will yield a fee. The key to being productive is to create systems that allow for smooth operation of the practice with the least possible investment in administrative maintenance. This will leave more time for billing.
The Challenges Of A Small Practice
My average client tells me that he/she feels comfortable working about 2500 hours per year. This number represents the total number of hours worked including all tasks. Yet, in a small environment, most have difficulty billing 5 hours a day out of the 10 hours at work. The reason is a seemingly endless supply of non billable distractions with which attorneys in large firms don't have to deal. Among these are:
Relentless client calls (no associate or paralegal to insulate the lawyer)
Clerical duties handled directly by the attorney (insufficient clerical help)
Preparing bills (no accounts receivable clerk)
Screening potential clients (insufficient clerical help)
Accounting (no accounting department)
Paying bills (no accounts payable clerk)
Landlord/tenant issues (no managing partner)
Computer and office equipment maintenance (no office manager)
By the end of the day, you know you have been working hard, but you have no idea why you only billed three hours out of the ten you were there. This is a common problem faced by lawyers in small environments.
Common Problems Affecting Productivity
In a large sense, the freedom that attracted the practitioner to the small environment becomes a major contributor to the productivity challenge. The point of having sought that freedom was to escape the oppressive structure of larger environments. Unfortunately, when the pendulum swings too far in the other direction, the result can be chaos.
Being in a small environment exposes a lawyer to a lot more details to be handled in various areas not previously experienced nor anticipated. If your previous life consisted of coming to work, working on legal matters given to you, keeping track of your hours and going home, running your own business is going to be a real shock.
The first thing that happens to lawyers when they get into a small firm or solo practice is they get overwhelmed by minutiae. Life becomes one annoying little problem after another with no one to handle them but you.
In addition, there are more little distractions, especially non billable phone calls from friends, family and others, with whom you would not think of having protracted conversations if someone were monitoring your billable hours every month. Distractions you might have allowed five minutes while you were in a large firm suddenly become 30 to 40 minute philosophical adventures.
Then there is your computer. Computers have a special magic feature that
makes then periodically malfunction, or worse still, function perfectly and
give you something completely different from what you wanted. The real sorcery
occurs when you attempt to fix the problem. Large blocks of time mysteriously
vanish. You start working on the problem at
Setting Priorities
With so many tasks, the natural thing to do is to try to handle them in the order in which they come. Then, as tasks begin to back up, most people do the tasks they find least aversive first, and keep working in least aversive priority until an urgent (but not necessarily important) distraction presents itself.
This "squeaky wheel gets the grease" method begins to produce crises since the matters that demand the most attention are not necessarily the most important things the lawyer has to do. The longer important matters are crowded out by urgent distractions, the more likely there is to be a crisis. After a while, so many important matters get neglected that the attorney is forced to shift into "fire-fighter" mode. Client inquiries about their work are added to the distractions that keep the lawyer from getting the work done. Before long, staccato interruptions riddle his/her office like machine gun fire and the lawyer doesn't know whether to stand and fight or run screaming from the room. Sound familiar?
The key to getting control of your day is to set clear priorities. Make a list of common activities in which you engage daily (including all the non billable distractions) and prioritize that list according to importance (billable matters and marketing your practice will be at the top of this list). This is not a specific "to-do" list, but rather a general list of daily tasks. I have listed some typical law office activities below. If you are having trouble making the list, spend a week keeping a task by task log, noting the starting time and finishing time for each task. Though this is tedious, it can be very informative.
Typical Law Office Activities
Answer the Phone
Appear in Court
Arrange Schedule
Call Another Attorney
Chat with Staff Members
Client/Prospect Meeting
Depositions
Direct Staff
Eat a Snack
Filing
Legal Filings
Make Coffee
Make Copies
Networking/Marketing
Non Client Meeting
Organization
Prepare Documents
Prepare for Court
Public Relations
Read Legal Periodicals
Read Newspaper/Magazines
Research
Return Phone Calls
Special Projects
Strategic Planning
Take a Break
Talk to Family Members
Talk to Friends
Type Letters
Write Letters
After you have a good general priority list, you have a template for prioritizing your activities. The first step is to produce a list of everything on your plate. You should list all the things you have to do (like billable projects for clients) and all the things you want to do (like updating your forms or buying a new computer). Divide the tasks into four groups according to urgency and importance. Insert them into a chart like the Priority Matrix below.
Priority Matrix
|
Activity
Priority |
Urgent And
Important |
Important but
Not Urgent |
|
1. Appear in Court |
1. Jones hearing |
1. Prepare for Molloy deposition |
|
2. Depositions |
2. Prepare Smith interrogatories |
2. Write Williams demand letter |
|
3. Prepare for trial/hearing |
3. File Johnson motion |
3. Call defense counsel on Peters |
|
4. Prepare for filing deadline |
4. |
4. Watkins marketing lunch |
|
5. Client/Prospect meeting |
5. |
5. |
|
6. Return client calls |
Urgent But Not
Important |
Not
Important/Not Urgent |
|
7. Marketing meeting |
1. Return brother's call |
1. Touch base with Ralph |
|
8. Strategic planning |
2. |
2. Get car serviced |
|
9. Non-Deadline documents |
3. |
3. |
|
10. Office organization |
4. |
4. |
|
11. Read legal periodicals |
5. |
5. |
Group One (Important & Urgent) - In this category you should put
tasks that are critical to your business, where time deadlines have passed or
are imminent. These items are top priority. You should work almost exclusively
on these items until this box is empty. Examples would be paying the past due
rent, preparing for tomorrow's trial, filing a lawsuit before the statute runs,
preparing a document you promised a client for tomorrow's meeting, calling a
client who is threatening to fire you and file a bar complaint, etc. This is
the fire-fighting box. The more items in here, the more harried and stressed
you will be, and the more your work product will suffer. If you are running
your business effectively, this box should be nearly empty.
Group Two (Important But Not Urgent) - In this category you should put tasks that are critical to your business where deadlines are not looming. These items are your second priority after completing Group One. Most of your important matters should reside in this box. Your daily objective is to get items in this box complete before they reach a point where they belong in Group One.
Group Three (Urgent But Not Important) - Here you put items that are screaming for attention, but are not critical to your business. Telephone calls from friends and family that are not bona fide emergencies should wait until you are home or until you have completely run out of items in the first two groups. Computer related projects that are not critical to your ability to do projects in Group One & Two (like organizing your word processor files) need to wait for a time when those two boxes are empty. These are discretionary tasks. They are distractions. Resist the urge to act on them until important matters are complete.
Group Four (Not Urgent and Not Important) - These are utter distractions and time wasters. They are allies in refining your procrastination skills and will destroy your productivity. They include things like playing solitaire and minesweeper on your computer, reading newspapers and non legal periodicals, calling family and friends who haven't called you in a while, calling into a radio talk show, coordinating activities for your non-profit committee, talking about college football with your partner for 40 minutes (bonus points for contributing to the inefficiency of the entire firm), going shopping for personal items, etc., etc., etc.. (By the way, all the above examples are things lawyers have personally admitted to me they have done during business hours instead of working on billable matters.) This is the dilly-dally zone. Activities in this box need to be done on personal time and have no business cluttering up your day. You should label this box, "Projects To Be Completed After Business Hours"
After you have completed your initial priority lists, you are ready to begin attacking your work. The tasks with top priority will be those in Group One. Within that group, prioritize the tasks by which items have the greatest combination of importance and urgency. When you finish this group, begin working on Group Two, etc.
Don't be discouraged if Group One has 35 items in it initially. It may take you a month, but you should gradually whittle that number down to the point where you are working primarily in Group Two. You will be better able to do this because by resisting distractions, you will spend less time on matters that aren't important. At the beginning of each day, you should update the lists. Certain Group One projects will be complete and thus crossed off the list. Certain Group Two projects will get hotter and move to Group One. New items will be added to your lists each day. This exercise might take 15 to 20 minutes each day, but it will improve your productivity by 1 to 2 hours.
The High Cost Of Telephone Interruptions
One of the most difficult aspects of a small practice is that clients call constantly and expect you to be instantly accessible. Once they reach you, they expect you to drop everything to deal with their matters. Most lawyers, feeling they are obliged to respond to their clients, divert themselves from the tasks at hand and accede to the clients' wishes. By the end of the day, you may have had 10 client calls and have been diverted 10 times from the important matter on which you intended to work. You now have 10 files open on your desk, on each of which you have spent about 15 minutes. It is difficult to create any continuity of thought working this way.
I estimate that for each interruption you have, you lose
There is also the issue of your work product. Practicing law requires analysis, assimilation, problem solving and creativity. The more continuity you have in your thought processes, the better your work product will be. The more pushed you are for time, the more shortcuts you will be forced to take. Therefore, constant interruptions not only cost you time, but quality.
The key to producing more and better legal work is to understand the difference between accessibility and responsiveness. Accessibility means the lawyer is able to be reached whenever the client wants him/her. Though this is a great comfort and convenience to the client, it is disruptive for the lawyer. Ultimately it is detrimental to the client because it will cause the client's work to take longer and the sum total of the interruptions will erode the integrity of the work product.
Responsiveness means the client can depend on having a conversation with his/her attorney within a reasonable period from the time of their call. It means the attorney returns calls promptly. Ironically, lawyers who are highly accessible are often not very responsive. The result of being accessible is that they get so far behind that they don't have time to return calls. This exacerbates the problem because clients learn that the only way to get through to their lawyer is to call relentlessly, leading to more interruptions, more delays, etc.
To increase your productivity, you should limit your accessibility and be fastidious in your responsiveness. Contrary to popular belief, though clients want you to be instantly accessible, most do not expect that you will be. They do expect you will respond within a reasonable period of time. That period is within 24 hours (or the same day if possible).
If you have a pager, NEVER give the number to clients. Your staff should be
the only people who should have the number. If you give the pager number to a
client, that client will take it as a license to page you any time he/she
pleases (including
Organizing Your Day For Maximum Productivity
To maximize productivity, you should organize your day to create "Work Zones". A Work Zone is a period of time when you work on a billable matter to the exclusion of everything else. You close your door and instruct your staff not to disturb you unless the building is on fire. When you are in a Work Zone, you take no inbound calls. As far as the caller is concerned, you are not in. If you have voice mail, forward your calls to voice mail. If you have a secretary, instruct the secretary to say you are not available and that you will be back at whatever time you set as the end of your Work Zone.
You should set two Work Zones per day, morning and afternoon. An example of a typical work day using Work Zones follows:
8:00 am - Set priorities and give staff instructions on day's projects
8:30 am - Begin first Work Zone
10:30 am - End first Work Zone (Return and receive calls; normal work routine)
12:00 pm - Marketing Lunch
1:30 pm - Return and Receive calls
2:00 pm - Begin second Work Zone
4:00 pm - End second Work Zone (Return and receive calls; normal work routine)
6:00 pm - Scoot home
This schedule assures you of four hours of uninterrupted time to work on matters of your choosing. You will find you will reduce the number of Group One activities dramatically if you adopt this system. You will produce better work and your clients will actually like it better because they will come to know that you will be dependable about calling them back promptly.
During the periods you are not in Work Zones, you will be working pretty much the way you do now. Since you will be on the phone a lot during these times, you should schedule yourself to work on lighter projects that are shorter in duration and easier to resume if interrupted.
My clients who have incorporated Work Zones into their day have shown dramatic increases in the number of hours they bill. They often pick up an additional hour a day or more. They also find they are better about answering calls and feel their clients are more satisfied with their service.
Setting Billing Goals And Tracking Hours
Another important concept in increasing billable hours is goal setting. It is crucial that you set aggressive goals for annual, monthly and daily hours, and then track your progress. Most lawyers, especially in small practices, have no idea on what they are spending their time. They feel they are working hard, yet they end the month with 62 hours. Before they know it, another year slips by and they have billed 700 hours, and their secretaries have earned more than they have.
No full time lawyer should be billing less than 1000 hours per year. If you are, you either don't have enough business (see my Business Development Section) or you are grossly inefficient.
To get to 1000 hours a year, you need about 4.2 hours per day. That will give you 84 hours per month. The way to make sure you reach that goal (or any more aggressive goal you set for yourself), you should track your hours each day and compare them against your cumulative goal for the month. Below I have included an example of a chart that will help you do this.
Monthly Tracking Sheet
|
Day |
Date |
Hours Billed |
Cumulative Hours
|
Cumulative Goal |
+/- |
|
Mon |
1 |
6.0 |
6.0 |
4.2 |
+1.8 |
|
Tue |
2 |
4.0 |
10.0 |
8.4 |
+1.6 |
|
Wed |
3 |
3.3 |
13.3 |
12.6 |
+.7 |
|
Thu |
4 |
2.1 |
15.4 |
16.8 |
(-1.4) |
|
Fri |
5 |
5.0 |
20.4 |
21.0 |
(-.6) |
|
Sat |
6 |
3.1 |
23.5 |
21.0 |
+2.5 |
|
Sun |
7 |
0.0 |
23.5 |
21.0 |
+2.5 |
|
Mon |
8 |
6.7 |
30.2 |
25.2 |
+5.0 |
At the beginning of each new month, you should insert your daily cumulative
goals. That number should increase by the amount of your daily goal (4.2 hours
in the above example) each day. On weekends and holidays, your daily cumulative
goal should not increase. If you decide to work on the weekend, you can use
this as a catch-up or get-ahead day.
Each day you enter your hours, add them to yesterday's cumulative hours and compare the result with your cumulative goal to see if you are plus or minus versus goal.
This exercise will take less than five minutes per day. If you are diligent you will find that you will become very aware of your billing pace and when you fall behind, you will feel more motivated to reject distractions and work on billable matters. Unless you don't have enough work, you will find that you will consistently come very close to your billing goal.
The Net Effect
Clients of mine who have combined the Priority Matrix, Work Zones and Goal Setting have consistently shown monumental increases in billings, which translated into more revenues and greater income. I have had clients increase their receipts $50,000 per year and more by consistently improving their productivity by an hour or two a day. Since productivity improvements don't require any extra overhead, that money turns into pure profit.
Many of my clients tell me that being more productive allows them more time to market their practices. So, in addition to the immediate benefit of increased income through productivity, they are building future revenues as well by improving their referral base.
Being productive is of paramount importance in a law practice. You only have so many precious minutes to turn into the dollars that support your family and bring you quality of life. Use those minutes wisely and efficiently and reap the benefits.
Copyright © Art Italo, 1996. All Rights Reserved
Select
this link to see Art Italo’s Practice Profile
Art Italo is a consultant working exclusively with attorneys in the areas
of business development and strategic planning. He speaks internationally on
legal marketing and strategic planning.
He has developed and refined the concept of Leveraged Networking after
over 15,000 hours of individual consultations with attorneys. He has personally consulted with over 250
attorneys in
For on-line help with your marketing questions, e-mail Art Italo at
italco@mindspring.com or contact Art
Italo at:
Italo Consulting®
P.O. Box 680474
Marietta, GA 30068
(770) 859-0600
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