Todd Gerstein is President of Smart WebParts. He talks about “time leaks” experienced by lawyers. His new product is called “Smart Time.” It’s designed to assist lawyers in capturing time they expended but failed to record. Studies have shown that time is “leaked,” lost or never recorded, to the tune of at least 100 hours per year. At $200 per hour, this is $20,000 in revenue per year that was never billed — and thus lost; simply because of careless lawyer behavior. Listen to more …..
In the only case decided today, in United Student Aid Funds, Inc. v. Espinosa, (No. 08-1134) the U.S. Supreme Court allowed the restructuring of a student loan. I didn’t think such loans could be part of bankruptcy proceedings, but apparently I was in error.
My question now is: How many more students/former students will be pushed into bankruptcy just to reorganize these normally very large debts?
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.
Welcome to the third LawBiz® photo caption contest! In honor of Legal Assistant’s Day this Friday, March 26, I thought I’d host another contest. The first two contests were such successes, so this time use your creativity to show appreciation to your hard-working legal teams.
Of course, the ever-popular Bandit is once again the subject of the photo. I know Bandit will be celebrating Legal Assistant’s Day this Friday, will you? Be creative, be serious, be funny – post whatever you think the caption for this photo should be!
At the end of the contest period, we’ll choose a winner who will receive a FREE copy of my new book just released by West last week Growing Your Law Practice in Tough Times, as well as a FREE ½ hour consultation with me.
There are a few rules to this contest, so please take note:
No more than five (5) entries may be submitted per person. Limit of one (1) per day.
Entries should be submitted as comments and must include e-mail addresses.
Entries must be received by 5pm PST on Friday, March 26, 2010 to be considered.
No lewd language or vulgarities. Such language will disqualify entry and will be removed by the administrator.
Have fun!
A winner will be picked by Monday, March 29, 2010 and announced here on the blog. Good luck!
More than 60% of the Bar is made up of lawyer firms ranging in size from solo to 9. In any business, one would think that paying attention to a demographic that provides such a high percentage of your revenue would be wise. Of course, that presupposes that your customer base has an alternative.
In the case of integrated (mandatory!) bar associations, lawyers must be members, must pay their dues no matter how they disagree with the policies of the staff or of its Board of Governors! Therefore, their views can be disregarded. Such was the case recently when sole practitioners objected to the new rule of professional conduct that requires lawyers to tell clients in writing when they do not carry E & O insurance (malpractice) coverage.
Today, in California, there was a hearing on the rule regarding the sale of a law practice. The proposed new rule will make the lawyers (both buyers and sellers) jump through more hoops and cause further delay to get a deal done, thus jeopardizing the entire deal. Who does this target? The sole and small firm practitioner. Only they are involved, to the extent this happens, in the sale of their practice. Large firms don’t sell their practice. They can break up, they can merge, they can combine … they can move entire practice groups from one firm to another … but they don’t "sell" their practice … at least they don’t call it that and thus side step rule 1.17 regarding the sale of a law practice. (I will discuss the details of the new proposal in later posts.)
So why should the Bar care? Why should they fix something that isn’t broke? Good question. I might attribute nefarious motives to the actors, but that would be unkind … and generally untrue. Because the folks on the commission are honest, hard-working and capable lawyers. But, in their zeal to do right, they are not doing good. They are like the law school professor who puts forth hypothetical situations that, if ever, happen rarely and can be dealt with on a case by case basis. The California rule ain’t broke; therefore don’t fix it.
When the ABA commission looked at the rule, they backed away from the precipice of considerable change … ultimately because they realized that there was no need to alter the rule. They made one change … and I’m proud to say I was the catalyst for this discussion. They now allow a lawyer to sell a practice area and still remain in practice, but not in the area sold. For example, a probate and estate planning lawyer may want to sell the estate planning segment, but retain the probate segment. This will allow him to work less, reduce marketing and still make a contribution to the law. Any other course would require him to sell/close the entire practice and wait for death … or continue his practice while serving his clients with less vigor because of aging … to the detriment of the clients. It is a shame that younger attorneys on the commission have little or no sympathy for this aging process.
I’ve seen it in my clients; I’ve seen it in my family. That was why I recommended that the ABA make the one change it did accept. Clients are better served, both those whose estate plans are handled by other lawyers interested in the segment they purchased, and those who are probating estates of decedents …
One example after another in recent years demonstrates the Bar focuses on its perception of public protection — I say its perception because I don’t think the public is truly protected by a number of its recent actions, two of which are mentioned above. It is also very clear, however, that the interests of the Bar’s largest demographic is either disregarded or adversely impacted by the Bar’s new rules. I have come to the conclusion that the Bar should be a voluntary organization … as is the American Bar Association … needing to justify its value each year in order to maintain its member participation and dues revenue. The "mandatory" Bar as we know it should only be a licensing agency ….
Do you know of other examples in the organized Bar that defiles the sole practitioner? Do you know other industries where such monopoly power gives them the right to disregard the interests of its customers/patrons/members? How about the health insurance industry? How about the increase in premium rates that recently went up 39% to people who literally had no choice of carriers, only the choice of paying the increased premium or dropping insurance coverage … How about the airline industry who, in response to recent "fliers’ bill of rights" announced a decrease in flight schedules and increase in fare prices? Other examples abound.
Unless the Bar is able and willing to enhance the value and contributions to lawyers from whom it receives dues, it should not exist in its present form.
