Every lawyer knows they spend time every day on non-billable activities, but just how many hours and what kinds of activities have always been a bit of a mystery. Until now. Just this past spring, LexisNexis® decided to try and crack the code between hours worked vs. hours billed. The goal was to get input [...]
Every lawyer knows they spend time every day on non-billable activities, but just how many hours and what kinds of activities have always been a bit of a mystery.
Just this past spring, LexisNexis® decided to try and crack the code between hours worked vs. hours billed. The goal was to get input from lawyers across the country, from solo practitioners to big-firm partners, litigators to personal injury specialists, and everyone in between.
The results were highlighted in the US-based LexisNexis® Billable Hours Survey that was picked up by legal and mainstream media outlets alike.
The main finding: many lawyers are spending more than four hours every day on non-billable activities! The biggest culprit eating up the majority of these non-billable hours? Administrative or practice management tasks, i.e. email and document management, filing, docketing, billing and accounting.
Other Results, and Another Revealing Study
On average, it seems lawyers have a 33% gap between hours worked vs. hours billed. That gap broadens when looking at data by firm size, where solo and small law firms reported over 40% of their time worked was non-billable.
These findings piqued our curiosity, so we conducted a secondary US-based survey, the LexisNexis® Non-Billable Hours Survey, in July. It focused on learning how lawyers spend their non-billable time—and whether practice area mattered.
We had some assumptions going into the survey (especially given the economy and the mass exodus, voluntary and involuntary, of lawyers from large firms in 2008-2009), that lawyers were spending that time on client development, or losing billable time to writing it down/off to retain clients, or by simply not charging for consultations.
However, the survey findings showed less than 26% believed writing down or writing off time contributed to their non-billable-to-billable hour gap.
How Practice Areas Mattered
In some instances, the practice area made a significant difference in billing efficiencies compared to others.
3 Geeks and a Law Blog founder Toby Brown voiced his view of the survey findings in a recent blog post, saying he felt that lawyers who wear a yoke around their neck to bill by the hour do a better job than those who might bill using alternative fee arrangements, i.e. fixed fee or contingency.
Most Effective Billers: Insurance and Labor Law
Insurance and Labor employment law were the two practice areas that reported the lowest number of non-billable hours per day. In my opinion, it’s easier to explain how the Insurance law got here, but not necessarily the labor and employment law.
For example, the insurance industry has been highly regulated for years, and in the late 1990s, insurance companies began requiring law firms to provide bills in an electronic format using specific task codes.
As Toby mentioned in his blog, the rates are highly negotiated in this field, and this can contribute to lawyers finding better ways to get work done—i.e. using a formal practice management and billing system to track client matter activity and provide bills in a format required to get paid.
Less Effective: Immigration, Criminal, & Personal Injury Attorneys
For the Immigration, Criminal and Personal Injury attorneys, there are several assumptions why they are reporting more than four hours a day of non-billable time.
Many of the legal services they offer are a fixed fee or on a contingency. So, Toby’s insight might be right on, because our data shows that billing flat fee or on a contingency basis might somehow give lawyers an excuse to not track their time.
However, of the lawyers who claimed Personal Injury as their primary practice area, more than 60% of them were small firms, either solo or duo attorneys. It’s likely they’re also trying to do administrative work themselves instead of hiring someone to do it. In this case, the size of firm is a highly contributing factor.
Non-Billable Time: Good vs. Bad
In law as in life, there is a hierarchy of tasks–and there are values to each of these tasks.
A simpler way to look at this is to ask yourself, “Is what I’m doing something that a staff member can do?” You wouldn’t delegate a staff member to go get new clients, set your case fees, or give advice to a client, would you? No. These are tasks that only you or another attorney should do.
So, would you pay administrative help more than your hourly rate to come into your office and file, make copies, scan documents, or do billing? Certainly not!
In the end, we agree with Toby: firms spend too much time on practice management and administrative tasks, especially when they’re feeling strapped for cash. In this case, outsourcing these functions may not be a viable option.
But there is a solution.
The Easy Fix—In Just a Few Clicks
For many firms, the solution to reducing their non-billable hours is fast, simple, and relatively inexpensive: legal specific practice management applications.
Unfortunately, the ones who could benefit from them most seem less likely to use them; industry stats show the use of software among law firms with fewer than nine attorneys is still well below 50%.
There are a myriad of providers out there who make a wide array of firm management products—both web-based and installed on your premise—that handle many of the day-to-day time-intensive tasks automatically. From calendaring deadlines to organizing your client activities, your practice can become easier to manage with just a few clicks of a mouse or tap of a tablet. Bonus benefit: you’ll also lessen your exposure to malpractice, conflict of interest suits, and a whole bevvy of career-ending woes.
But don’t take my word for it. Ask your professional liability insurer or your local practice management advisor. After all, they know first-hand the number and types of disciplinary actions lawyers are facing today.
I’m sure you’ll quickly find out that they’re advocates for utilizing tools to help with your obligation for client and matter record keeping to include communications with clients via email, documents, phone calls and of course your billing and trust accounting.
In the world of law, leveraging technology is the shortest path between billing success and the middle of the pack.
I rest my case!