The Recordable Hour: Don’t Stop Believing

This article was originally featured on Above the Law.

I am a firm believer in sharing mistakes or missteps to save others pain, whether it’s bar study tips, law firm management advice, or general business information. Earlier this month, I recorded an Evolve the Law podcast with Ian Connett, where we talked about the recordable hour. Not the billable hour, not utilization statistics, but recording or capturing your time regardless of billing approach. And that includes contingency fee practices and in-house lawyers.

Earlier in my career, as a consultant, I helped a business redesign their business processes. One of the critical steps was to calculate improvement.  These engagements were in a variety of industries, mostly outside professional services, where employees would not necessarily be tracking their time. So, I would explain that they needed to capture all hours to see where they were spending their time, as baseline data. Even it was just for the purpose of a project or process, recording hours for a day, week, or more, provides powerful information.

Later in the 1990s, when I ran a training and development company that sold a customizable proprietary learning management system for installation at customers’ premises, we spent much time on internal process review and recordable hours. There, and the decade before, when I was a financial auditor, our projects were all flat fees. It was essential to record all time. Back then, as professional accountants, we knew that capturing hours was not just for billing, it was good management information, now referred to as data.

And, apparently I cannot say this enough, your law firm is a business and all in-house attorneys are working in a business. Time is money and hours are the input currency for professionals, even when some tasks are done by technology.

Today, whatever process improvement is labeled, design thinking or lean, the basic principles remain the same. If you are interested in learning more about process review, please check out my new book on Amazon here. It’s a cheap and cheerful, technology-free approach to gathering information, including the recordable hour, for your law firm. As an aside, this recordable hour is part of the newly named data-driven approach to business.

Recordable hours are important information for many reasons including:

  • Law firm pricing: how can you know if your flat fee makes financial sense without knowing how many hours it takes to perform tasks? (same goes for hourly rates)
  • In-house efficiency: how can you request more staff or technology without making the business case, where the first question will be, how much does this change save?
  • Administrative work: how can you know if you are better off outsourcing or delegating work if you do not know how much time you spend on non-legal tasks?
  • Client Development: how can you answer the question of how much it costs to bring on a new client or sell new services to an existing client without the hours?
  • Profitability and Ideal Clients: Unless all the hours are captured, you can never understand where you are making money and which clients are ideal for your bottom line.

In the past year, I have seen a large company’s legal department put in place a new process without first capturing baseline data, including time spent on the very task that was automated. When the general counsel tries to tell the story of the return on the investment, there will be a significant data gap. The same goes for a medium-sized law firm that implemented new technology.

Recently, I started a flat fee project for Nimbus Legal, as Of Counsel, and we did not have a lot of past data for this type of work. For Nimbus Legal, I am also part of the team that is working on our processes and fees, as we add more Of Counsel attorneys in 2019. Therefore, I have been recording every minute and evaluating the process as we proceed. I have broken down the overall project into tasks, in case we need to do this work in the future in some different format. This approach has allowed me to see where we went wrong in the fee estimate. For example, we underestimated both the amount of client management and the non-legal or strategy assistance, due to the type of client.

If you would like to discuss, or debate, the recordable hour, please reach out on Twitter @maryjuetten or direct message any experiences that you would like to share. Also if you are interested in learning more about Nimbus Legal, please email me mary@nimbuslegal.co. #onwards.