Time tracking is an integral component of running a successful legal practice. The implication of improper time tracking can adversely impact a law firm. A 2020 Legal Trends report shows that lawyers spend 30% of their typical day doing billable work. This leaves approximately two-thirds of their workday on non-billable time. Lawyers can successfully address this discrepancy in productivity by tracking their time and managing well-kept records.
Sadly, many lawyers still rely on call logs, calendars, and outdated Excel sheets to track their time. These methods contribute to potential loss of revenue and incomplete or inaccurate invoicing that can lead to overcharging a client. When such happens, it reflects poorly on a law firm’s ethics, and its reputation suffers. In worse case scenarios, it could potentially lead to legal malpractice.
Importance of Accurate Timekeeping with Law Firm Billing
Billable time is a significant factor that helps lawyers determine the growth of their firms. The billable hours help determine the value of fixed fee rates and the ROI in time and effort. Wasted hours could amount to considerable lost revenue, especially when they accumulate over time.
It becomes challenging for lawyers who ignore the billable hours to maximize their productivity. They also have no way of telling if they are compensating themselves for time and effort.
At the law firm’s owner level, poor time tracking can lead to the firm’s closure. Partners need to be paid in profit share, which affects the profitability and liability that comes with ownership. Based on the structure of the firm, partners may become liable if a law firm dissolves. Any compensation they receive goes into bankruptcy proceedings. If the company dissolves before billings, there is a high likelihood that the partners will lose that money.
Mistakes Law Firms Make in Tracking Time
In some cases, some lawyers fail to track their billable hours the right way because they make mistakes in their approach. Some may not even be aware that there are mistakes in their time-tracking systems or structures. Here are common mistakes that could spell trouble for a law firm. Realizing them early enough could go a long way in enhancing productivity and profitability.
Proceeding Without an Effective Legal Tracking System in Place
Before tracking a matter for the first client, it is paramount to have a tracking system in place. Proceeding with business without a tracking system can open-up a law firm to inaccurate time tracking, leading to inaccuracies in invoices.
In such cases, the lawyer relies on memory to track their billable hours. Unfortunately, the brain is fallible and can lead you to make guesses. More often than not, the firm loses money. The lawyer could either charge a client for work already done and paid for, which erodes the client’s trust. On the other hand, they could undercharge the client, which may be financially destructive for the firm.
Not Using Technology to Boost Time-Tracking Efficiency
The legal field is known for its conservatism, which extends to technology and all the solutions it brings. While it could be just a stereotype, it’s also true that most legal firms are hesitant about using modern technology. Cloud-based solutions are still not fully embraced in the legal field.
As most lawyers and law firms remain stuck with old-fashioned software, they encounter more pain than gains. Yet, there are tools they can adopt to help them track time and boost productivity.
Not Tracking Immediately
Some law firms have excellent tracking systems in place, but they don’t utilize them correctly. The best way to get the best out of tracking systems is to put them to work immediately after completing a task. Postponing your time tracking function could have the following consequences:
- 10% revenue loss if entries of the day’s records happen once a day
- 25% loss if time records occur 24 hours later
- 50% to 70% loss if time records wait until a week later
Most time-tracking solutions on the market have the flexibility and mobility that allows lawyers to track their time from virtually any location. After installing the time tracker on their laptops, tablets, or phones, they can immediately track the time spent on a task.
One reason law firms may not track their time immediately is that they lack a set structure everyone should follow. Time tracking is a multi-pronged problem that requires accountability. This should happen at three fundamental levels, with proper protocols for each.
- At the individual level: Lawyers and their support staff should individually track their time. However, the focus should not be at the individual level because it comes with punitive measures that push good lawyers away.
- Group level: The groups can be formal, comprising associates, partners, and paralegals. They can also be informal, bringing together top performers against average performers, for example. Each group has its norms, expectations, and subculture.
- At the system level: This should form the foundation for time tracking in every law firm. The systems in place go a long way in shaping the team’s responsiveness. If handled well, time tracking at the system level creates a culture of consistency and accountability. It entails policies and procedures, systems, and tools that make it easy to hold the entire firm accountable.
Getting a Solution for Effective Time Tracking
Getting the right technology for your law firm can save you from problems associated with poor time tracking practices. When looking for software for this functionality, look for one with more than basic reporting and tracking functions. A comprehensive tracking solution should have the capacity for granular reporting, advanced billing features, and increased tracking as part of its enhancements.
Besides, it should easily integrate with other existing platforms you use daily to run your firm such as QuickBooks. Its features should help track your activities and automatically associate them with the appropriate file. With such a solution, you never have to find yourself reconstructing time spent on billable work.
Finding the best billing software can be complex, but not when you have LawBillity by your side. We are a legal software provider focused on helping you bill by the minute to avoid losing valuable time. Our solution helps you update your timekeeping by saying goodbye to spreadsheet records. You can install it as an app for Android or iOS. Try LawBillity time and billing software for free for 14 days to improve your collection rates through accurate time tracking.