Last week, Loretta Ruppert provided us with the reasons she thinks lawyers should track all of their time, billable or not, regardless of the way they calculate fees for clients. This week, I’ll give you my take on this issue.
I agree with Loretta that to increase productivity and work satisfaction, it pays to analyze what you’re doing now in order to see what needs to change and how to improve in the future. But I’m not convinced that tracking your time in six minute increments, or writing down everything you do in a week or a month is the answer.
How Accurate is Your Timekeeping?
First, no matter how meticulous you are about tracking time, you are probably missing some, or incorrectly allocating time. As Loretta mentioned in her post, it isn’t uncommon for lawyers to be sitting in their offices for 12 hours and have only 6 hours of billable time on a time sheet at the end of the day. I know that when I was practicing, that was a common experience. But even writing down the non-billable activities isn’t likely to capture all of your time, because most people are not going to count “interruption” time correctly – or at all.
For example, let’s say you are working on a contract for client A when you are interrupted by a telephone call from client B. Even if you stop the clock on the task for client A and time the call with client B, and then resume counting time for the client A contract when you get back to it, your time isn’t likely to be accurate. It may take you much longer to complete the client A contract then it would have without the interruption - you may need time to review where you were or what you were working on, and studies show that it takes time for the brain to switch gears. You may also be somewhat distracted by client B’s problem or what needs to be done next for client B while you are working on the contract for client A – so does that time ‘count’ for client A, or client B?
Even if you are tracking time for productivity purposes and not for purposes of billing the client by the hour, your numbers will likely be ‘off.’ You may decide that you spend too much time on contracts and you need to shave that down in order to be profitable on contract matters, when your real problem may be that there are too many interruptions and you are not managing your activities in the best way possible.(For another example of inaccurate time allocation, see the deposition example in my post , “Can You Really Ditch Timesheets If You’re Not Billing Hourly?”)
Timesheets and Profitability
As for the question of profitability, I wrote a blog post on that issue some years ago, entitled, Do You Need Timesheets to Determine Profitability? In that post, I pointed out that if you want to use time as a factor in determining profitability, you would have to keep track of all of your time (as Loretta recommends), but you would also have to figure out how to allocate all of the non-billable time among the different files. How can you use time to determine profitability of a particular client or a particular matter if there is non-billable time that is not allocated to those matters? Would the non-billable time be allocated equally? Should it be?
The big problem with thinking that profitability is tied to hours is that such a system requires you to put a ‘value’ on an hour – and even if you are billing hourly, every hour is not equal in value – to you or to your clients. Some non-billable hours spent cultivating client relationships or creating value for them may be worth more than your hourly rate. Some hours you spend on client work are worth less to the client than others (which is why when lawyers bill by the hour, they make adjustments to the bill).
So how does keeping track of hours help determine profitability of a particular client or matter? The only way is to assume every hour is worth $x and compare that way – but we know that assumption is incorrect – and it is even more damaging when the firm is not billing by the hour, because it puts the focus back on time, rather than on creating value for the client. Alternatively, you could assign a different value to different tasks and then multiply the time by the value of that specific task –that would not only be complicated, but begs the question – if you can already assign value to the task, why bother with the hours?
Timesheets as a Measure of Productivity
For purposes of productivity or workflow management, keeping track of how long it takes to perform a discrete task or group of tasks over a set period of time may be helpful. It can be an eye-opening experience to see, in black and white, just how much time is spent responding to email, or setting up a client file, or sorting through the daily mail. But it is unlikely that someone tracking all of their time is going to allocate time to “looking for the Hudson file;” instead, they will likely track it as part of the work they do on the file, which would defeat the purpose – unless, of course, the purpose of tracking time is solely to see how much time is wasted by looking for files, or being interrupted, etc. And in that case, rather than tracking everything in detail you can pay attention to those few tasks for a limited period of time.
The truth is that tracking time is, in itself, time consuming (do you keep track of how much time it takes to track your time and write down the details?), and it doesn’t measure the things that really make a difference for law firm profitability – most notably, the client’s experience with your firm. Looking simply at the numbers – this is how much time we spent and this is how much we were paid – doesn’t tell the whole story. Those numbers can’t tell you which clients will return to you with new work or refer other business to your firm. The numbers can’t tell you whether what you learned during that particular matter could be useful to another client in the future, allow you to increase your fees or attract new and better business.
As I said in “Can You Really Ditch Timesheets If You’re Not Billing Hourly?”:
“It isn't the lawyer's time that's valuable, it's the knowledge and experience that they bring to a client's problem or situation, and the manner in which they apply that knowledge and experience. The value has nothing to do with the length of time a lawyer is working on a particular task or matter.”
Putting the emphasis on the time spent, rather than on the experience the client has with your firm throughout the engagement and the results achieved puts the emphasis in the wrong place
On an individual, short-term productivity level, I agree with Loretta that occasionally keeping track of how you spend your time at work can be very valuable. But on a firm-wide level, or as a measure of productivity or a means to manage and evaluate employees, I don’t think spending time and energy tracking all of your time is the way to go.
What do you think? Let us know in the comments