Lawyers shouldn’t sell time. They should sell their advice; their solutions to clients’ problems; or their ability to maximise the position for their clients.
However, where do profits come from in law firms? As people businesses, they come from generating income and paying people to generate that income. What is the cost of those people? – Time.
As a result, fee earners should record time even if they don’t charge clients by the hour. More and more law firms are now agreeing fixed fees with clients for all work types. Some are even basing those fees on the value generated for clients by solving their problems or maximising their position. Even where that is the case, all matter related time should be recorded because it helps management decisions to be made on efficiencies.
Without base information on how long it takes to perform certain tasks, it is difficult to determine potential benefits that process change or technology investment may bring.
Having agreed a fee for the sale of a product, would you advise a manufacturing company to acquire raw materials without thinking about the cost of those materials, or how long it takes to assemble them? Cost of production applies equally to the professions!
Time recording isn’t there to maximise income (although it can help); it is there to maximise profits.
Legal Sector Partner
Andy Poole is the Legal Sector Partner at Armstrong Watson, specialising exclusively in advising law firms. Author of the Law Society toolkit on Financial Stability in Law Firms, Andy heads the legal sector team at Armstrong Watson, which has 15 offices and over 400 people. The legal sector team advises law firms throughout the UK on strategic, structural and other business improvement issues as well as providing efficient accounting, tax and SRA accounts rules services. Further information can be found at: www.armstrongwatson.co.uk/legalsector