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Time recording - time well spent

Time recording - time well spent

Matthew Dow

22/01/2020

In the legal sector, time is money. Therefore, recording your time is very important to law firms.

The billing model

Put simply, the legal sector’s historic billing model has relied on law firms charging their clients for the time that the lawyer worked on a particular client’s task. In addition, in terms of billing, the cost of this time usually varies by the lawyer’s seniority.

For instance, a client expects to pay more for a partner’s time, than the firm’s trainees’ time. Naturally, these differing chargeable rates means that clients’ demand that the type of work a partner performs to be beyond the scope of a cheaper paralegal or junior lawyer.

Hence, it is financially ineffective for partners to perform routine admin tasks. This is because the lawyer will be unable to justify their high fees for such standardised work. In addition, the partner’s time can be better utilised on more complex, more lucrative work that necessitates years of expertise to perform correctly.

Measuring work – unit by unit

So, how does the legal sector differ in its time recording approach to other industries?

In city law firms, time recording is incredibly specific. In many other sectors, a company’s clients will receive monthly invoices based upon timesheets. These timesheets feature all the work that has been completed by employees for the client, broken down by hourly intervals. For example, an invoice may state “an hour spent in meeting with the client” and “two hours spent creating presentations for client”, etc.

By contrast, in law, time is recorded into smaller six minute intervals. These intervals are known as ‘units’. The time that a lawyer spends on a task is usually rounded to the nearest upper unit. So, for example, three minutes of work will be considered one unit, despite not reaching the six minute threshold. Similarly, seven minutes of work will be considered two units.

Almost every action by a lawyer pertaining to client work is measured and the time is often charged to the client. This chargeable work may include the time that the lawyers spent reviewing other’s work, writing an email to the defence, meeting with the client and even answering a telephone call from a client.

As such, many firms will have software which upon a click starts a timer. Any time that a lawyer starts work on a fresh task, a meeting begins, or they make a phone call – a new timer will be turned on. This allows the lawyer’s time to be precisely recorded throughout the day.

Consequently, when the lawyer leaves the office in the evening, it is not unusual to see 20 of these timers stacked up. These stacked timers will be a record from the various workflows that have arisen throughout the day.

Is everything that a lawyer does charged to the client?

Not exactly.

After all, law firms are businesses – consequently the firm can only survive insofar as the partners keep their clients satisfied. Therefore, frequently law firms will charge less ‘time’ than their employees actually spent on client tasks.

For instance, imagine that the team spent 100 hours working on a transaction. Well, the client may only realistically be prepared to pay for 80 hours of work. This limitation may be because the corporate client has a specific budget for legal services that they can authorise, or the client deems that the work involved is worth only so much.

Therefore, to maintain the client relationship, remain competitive with other law firms and to encourage repeat business, the partner may make an executive decision. The partner may decide not to charge for anything peripheral to the client brief, such as emails, phone calls, standardised contract drafting based on regularly used precedent, etc.

In this situation, the law firm may only charge the client for 80 hours work, despite the team working 100 hours in total. In legal jargon, this cutting of billable time is known as a ‘write down’. The final fee that firms receive from a client versus what they could bill the client in total hours is known as the ‘realisation’ rate.

Additionally, you will be expected to record your time on non-chargeable activities. For instance, time that you spend performing routine admin tasks, such as formulating to-do lists, organising your files, as well as any internal training sessions or committee attendance. This time is considered ‘non-billable’ time that is only reviewed for internal purposes.

How does time recording impact lawyers?

These ‘write downs’ have an impact as many solicitors receive ‘billable hours’ targets. For example, you may be required to work 100 hours a year (probably 20 times that in reality!). Hence, at some firms, if you have worked 100 hours on a case, but the client is only being charged for 80 hours, you may need to work those 20 hours again to reach your billable hour target.

In addition, the lawyer may have a threshold of chargeable hours that they need to reach each day. This ratio of chargeable/non-chargeable hours is typically higher for an associate than a trainee. The trainee may have a greater proportion of non-chargeable time each day than more senior colleagues due to training requirements, salary justifications etc.

Furthermore, time recording is important for data analysis and individual performance reviews. For law firms, time recording is the predominant way of measuring an individual’s efficiency. For instance, if it takes most trainees 15 minutes to draft a letter, but you are taking 40 minutes to complete this task, then this efficiency discrepancy is revealing.

Considering the above data, perhaps you need additional drafting training? Alternatively, maybe other colleagues have missed crucial information that needs reviewing by them? Most likely, you are experiencing IT issues which impede how swiftly that you can perform the task! By constantly recording this data, you and your employer will be able to get an indicative view of your productivity and areas for improvement.

How does this time recording impact law firms?

Law firms will also accumulate this data to make business decisions.

The recorded data will be analysed and interpreted in many different ways by partners. For example, data may be used to determine how much the firm can profitably charge a client in fixed fees for recurring work given the amount of employees’ time that is invested? Likewise, the data will inform how many new staff they will need to hire for any upcoming projects. Elsewhere this information has been used to justify the large capital expenditure of legal technology. The data can even be used to decide lawyers’ bonuses and to advise HR on disciplinary action.

Time recording – personal benefit

So, how does time recording impact you and how can you benefit?

Firstly, it is good to know about the billing structure of law firms. These practicalities govern the day-to-day life of being a lawyer. Knowledge of how a law firm operates as a business can distinguish you from other candidates.

Secondly, the time recording culture of law firms is a real shock to the senses if you have never experienced it before.

You will take longer on tasks than you initially accepted. Consequently, the temptation to write down your own hours is always there, yet such temptation should be avoided. Be assured, others will write down your time for you if necessary. Therefore, knowing how the data is used will encourage you to be more accurate when recording and more thorough with your work description – a good practice from the start.

In addition, the need to be precise with time recording and focused on billable work can make law firms very ‘direct’ places at times. For instance, email replies can be rather laconic and many trainees contend that explanations for delegated tasks are often rather streamlined.

In other sectors, the office culture is arguably more relaxed and discursive. This is because elsewhere there is potentially more discretion as to how you work. Moreover, there is perhaps less oversight as to how you use or record your time. Please note that this law firm culture is not necessarily inevitable, or a bad characteristic - it's just a common feature of firms that is worth being prepared for when undertaking a vacation scheme or spring insight week.

However, perhaps the biggest takeaway that I have gained from time recording is that the practice can also make you more productive.

Regular recording means that you gradually realise how long tasks actually take to complete. Hence, you can allocate sufficient time to complete similar assignments properly in future. You may actually shock yourself how much time you spend on unimportant diversions mid-task in reality.

By recording, you can appreciate what distractions meant that you took longer on a project than would be normally expected. Elsewhere, by setting timers and avoiding ad-hoc checking of your phone or laptop until the bell rings, you can drastically reduce procrastination and instead increase your concentration on your priority work. This renewed focus can only be a positive when balancing work commitments, social events, study time and those all-important applications.