Lost time = Lost revenue
In an interview with Todd Gerstein, President of SmartWeb Parts, he talked about attorneys’ time "leaks." This is an interesting concept, one supported by a number of different surveys. These surveys all point to the fact that time is lost (and therefore not billed) when an attorney fails to make contemporaneous notations of work being done.
Todd suggests that at least one in five timekeepers are guilty of failing to contemporaneously record their time. That’s 20% of the profession. Actually, I thought it would be much higher. But, perhaps our discussions over the years on this topic have sensitized a growing number of attorneys about the need to pay attention to their billing practices. He also suggests that almost 80% record their time days or even weeks later! This is just short of criminal negligence!
Attorneys defend their actions (or lack thereof) on a number of grounds: Too busy doing the work for the client; not in the office to input time into the firm’s system; forgot to do it now, but will catch up later in the day or week. While these are all good reasons for not making a time entry, they are not good excuses.
The real question, then, becomes what is the impact of failing to record time contemporaneously with the work? What is lost, if anything, by failing to record one’s work effort? The simple answer: Revenue!
Todd mentioned a new survey that I found interesting.
If you fail to record your time while you’re in the office, the loss is 12 to 30 minutes per day. If you fail to record time while you’re out of the office, the loss is 30 to 60 minutes per day. Let’s use the latter number, 60 minutes per day, for ease of calculation, times $200 per hour billing rate. Using a 50 week year, you’re now looking at $50,000 revenue that is lost … that is, never billed! Forget about the issue of realization rate and collection. You never can realize what you don’t bill. Your client will never pay what is not billed.
You’ve "cheated" yourself out of a very significant amount of revenue by not adhering to good operating procedures in accounting for the time you spend on clients’ matters.
Listen to Todd’s podcast for more.Tags: Cash Flow - Finances
Categorized in: Cash Flow - Finances