Legal Ease Blog

New York Judge Sides with Law Firm on Fee Dispute Issue

Earlier this week, in a case entitled, Emery Celli Brinkerhoff & Abady, LLP v. Michael Rose, Manhattan Supreme Court Justice Joan Madden sided with a law firm in a fee dispute with a client who began paying the firm, but never completed all of the payments.

According to a New York Law Journal article about the case, the judge's opinion cited the "account stated rule;" since the client paid part of the bill, the client was deemed to have accepted the entire billing as valid.

The opinion notes that during the first year the firm represented Rose, monthly bills were regularly paid, but that those regular payments ended in January 2006, following which sporadic partial payments were made up until August 2009.

Notably, the firm contends that Rose did not contest any portion of any outstanding bill until late in November 2009, when minimal objections were made for a total of less than $3,000, which the firm subtracted from the amount it sought to recover from Rose in the suit. Once the suit was commenced, Rose did not assert in his answer that there was any malpractice or misconduct on the part of the firm, however, these allegations were raised subseqently when the firm attempted to assert a charging lien against the proceeds of the settlement previously negotiated by the firm on Rose's behalf. Rose was subsequently provided a number of opportunities to amend his answer to assert claims of malpractice, but never did so.

The court found that there was an implicit agreement that Rose would pay the firm's outstanding bills, stating that an implicit agreement to pay can be the result of either "the absence of any objection to a bill within a reasonable time or a partial payment of the outstanding bills.” (citing additional cases). The court noted that the client claimed to have objected orally to the bills earlier, but these undocumented assertions, without specifics about when the objections were made, to whom, which invoices and specific charges were objected to, and what the substance of the conversation with the firm was, were insufficient to defeat the firm's claim of account stated.

In this case, one of the saving graces for the law firm was the level of detail contained in their bills. This, coupled with the late (and extremely vague) objections from the client about the outstanding charges, served the firm well. Word to the wise: document the work done for your clients well, and be sure to keep good records of oral communications, too.

 

 

 

Is Auto-tracking Computer Use Any Better than Traditional Time Tracking?

 

Are you being watched?

Within the past month, Loretta Ruppert did a guest post on lawyers tracking all of their billable and non-billble time ("Tracking the Zero Dollar Hour"), and I posted my (somewhat) contrary opinion in a response post, "Is Tracking Time a Waste of Time?" After my post appeared, a reader commented about web-based time trackingt tool Toggl and provided a link to another, similar tool, Time Doctor. Actually, that link was to a blog post on Time Doctor's site about why most time tracking software is flawed. Here are some direct quotes from that post:

 

An example, if a person is working on a particular task, and they decide to start chatting on Facebook instead of the task they’ve specified, Time Doctor will ask the person if they are actually working. Features like this reduces the amount of personal Internet use at work.

If a worker stops using their computer, Time Doctor will, after a while, automatically stop tracking time – breaks, as well as time spent working, are tracked to the minute (although, users can still track time spent off the computer at the click of a button).

Time Doctor will also remind the person when they come back to the computer to start tracking time again, as well as asking what task they are working on. Everything is tracked in real time and it is impossible to allocate two activities to the same time slot  (even when adding time manually). It even works when there is no Internet connection available.

The reality is that lawyers do a lot of work that cannot be tracked this way. What happens if the lawyer needs to work in several different applications at once? Preparing a brief or motion papers may require the lawyer to work in a word processing program and use the internet for legal research at the same time. And there is significant work that is done by lawyers that would always need to be entered manually - time spent with clients, on the telephone, in court, in meetings, etc.

But none of that gets to the real point, which is: is this really how we want lawyers to work? Doesn't this seem a bit like "Big Brother?" Can you imagine being interrupted by your computer asking you if you are really working? (especially if you're on Facebook "chatting" with a client or researching something for a pending case) It might reduce personal internet use in some circumstances, but I imagine that for most professionals who genuinely work hard and want to do a good job, it would breed resentment - and might even waste additional time by constantly interrupting their work.

Lawyers are knowledge workers, not robots. To do their best work, lawyers need to have the autonomy and freedom to think creatively and to come up with new solutions and arguments for their clients - to solve problems in ways that both sides of a transaction will accept. Does this kind of activity tracking promote that kind of thinking? Does it encourage lawyers to do their best work? I don't think so, and that opinion seems to be backed up by studies like those referenced in Daniel Pink's book, Drive: The Surprising Truth About What Motivates Us. 

(And by the way, I find it interesting that the same individuals who claim that law is a noble profession that shouldn't be 'debased' by discussions about marketing or law as a business are the ones who are the most adamant about keeping very tight controls on their associates and other staff -- if law is a noble profession, why not treat your employees like professionals? But I digress...)

In addition to the comment mentioned above, I also received a private email from an individual working for a software company that developed similar activity-tracking software for engineers. He wanted to know whether I thought the program could be applied to lawyers as well. Here is my response (items in brackets were edited or added for this post):

It sounds as if your product is similar to some other products already in use in the legal arena (Chrometa is one example), and it might be of interest to many lawyers who need to track their time for billing purposes, but I am generally not in favor of this kind of tracking if it isn’t necessary (i.e. if the court or the client does not require it).  It can feel a bit “Big Brother”-ish and it puts the emphasis in the wrong place. I think that in the long run, it hurts rather than helps productivity and it kills innovation and creative thinking, which are the real value that knowledge workers like lawyers and other professionals bring to the table.

Although there are lots of things that go on within a law firm that are duplicated and could benefit from faster production, I’m not sure that these kinds of benchmarks would be that helpful – the general document creation for those kinds of things is often done with document generating software or form tools and it is unlikely that tracking the time to complete those first drafts would make much of a difference in light of the technology being used. [And in other circumstances, the main drafting work for hourly billing lawyers is non-billable and is performed initially by support staff. In still others, the problem has more to do with workflow and management than the time spent on the document itself].

To my mind, the real value of [documents created by lawyers for clients is not the document itself, but the lawyer's understanding of] the client’s situation and [the customization of] the documents to the client’s unique needs – and I don’t see these kinds of programs being much help there, either. First of all, a lot of what goes into that kind of work isn’t done on a computer in any way that could be accurately tracked; some of it has to do with relationship building with clients, listening skills and time spent with a client. Secondly, since each client’s situation is different, it would be hard to establish any kind of meaningful benchmarks – tracking these things might lead to a lesser quality output if a lawyer was concerned about spending “too much” non-billable time with a client.

I'm not trying to bash these kinds of software programs - I just think we need to stop and think about what kind of future we're creating for our profession and what we want to focus on.

Of course, I realize that some lawyers are stuck with hourly billing because the courts and the judges often still require time records when they set fees or make fee awards, and some well-paying clients refuse to accept any kind of law firm billing that isn't hourly. In those instances, some of these software programs could be helpful - particularly for capturing things that many attorneys forget to bill, like emails (especially when those emails are sent from a smartphone or other computer that isn't part of the office computer network). And I'm sure they would help the firms that bill hourly and have some lawyers who refuse to enter their time contemporaneously, so it's anybody's guess whether their time entries are accurate or not.

I'll even concede that on a short term basis, these programs might help make some productivity gains. But as a long term, permanent solution? I don't think so.

And even for hourly billers, these programs can cost more time than they save - as one lawyer put it: "I did a trial of [one of these auto-tracking software programs] a few years ago. Since it tracks every phone call and every email, it took a lot of time to sort through the information and delete the non-billable communication. I felt that I was spending more time "training" the program that it was benefiting me."

What do YOU think about auto-tracking software for lawyers? Leave a comment and let me know.

 

Is Tracking Time a Waste of Time?

 

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

 

How to Choose Billing and Accounting Software for Your Law Firm - Guest Post

This is a guest post written by Loretta Ruppert, Senior Director of Community Management for LexisNexis’ practice management team, including law firm management and legal billing software. She has experience as a business owner, a technology and business consultant for law firms and other professional services firms and is an expert in developing back office software.

 

Many attorneys are finding themselves with a shingle open for business, some by choice and others for survival. Owning your own law firm can be exciting and scary at the same time. No matter how you got here, you now own your own business and need to be aware of what to consider when looking for a billing and accounting software. First, let’s start with the basics. 

Why do you need billing and accounting software? Why not use a word processor, spreadsheet and a manual checkbook? You can! But if you do, you end up recording your time on sheets of paper and when it’s time to prepare a bill for your client, you are re-typing the information to create the bill. Don’t forget about the risk of mis-typing the time worked or calculating the total bill due. 

Likewise, you can write checks to pay your bills using a checkbook. Once again, this information will get re-entered by you, your bookkeeper or accountant into some system. Why? Because at the end of the year, you’ll need to file your taxes and need to know how much you earned and where you spent your money.

If you have been convinced to go with technology for your billing and accounting needs, you are faced with a plethora of billing and accounting software options to choose from. You can buy some software at the big box stores and others from legal specific vendors. Is there a difference? And if there is, why should you care?

With off-the-shelf billing and accounting software, you might be able to track your expenses and bill your clients, just like you can cook food using your dishwasher. It can be done, but does it make sense and more importantly, how does it impact your ability to bill more time? Below are six reasons why you should select legal specific billing and accounting software programs for your law practice, rather than relying on generic options.

1. Time capture – Enter it once and it’s done!

As a practicing attorney, you get many interruptions throughout the day. You need a way to record what you are working on, not onlyso that you can accurately bill your client, but also so that you have detailed records of the work you performed for the client in case a dispute arises in the future. Look for legal specific software  with timers that can be started and stopped in the programs and platforms you use every day, like word processing, spreadsheets, email, calendar and yourweb browser . Most legal specific software provides a traditional timesheet also with timers to record your work. When you click done, the time entry is saved to a client and matter. You can choose whether you want to record the time by the minute or in increments of time, like 6 minutes or quarter hours, etc. 

2. Expense Capture – Out-of-pocket vs. Soft

For client related expenses, you need to differentiate out of pocket costs  such as recording and filing fees from soft costs, i.e. photocopy and postage charges. The IRS released audit guidelines that specify a law firm cannot count client reimbursable expenses against their income for a given year. Essentially, the IRS views advancing expenses on behalf of clients as providing your client with a loan. 

Legal specific software can track the difference between an out-of-pocket cost and a soft cost and can properly account for them on your financial statements.  (Note: the way expenses are accounted for in contingency cases may be different. See this article referencing Boccardo v. United States). 

3. Specific Billing Needs

Law firms must have billing and accounting software which allows for flexibility in billing arrangements beyond hourly billing, including flat fee, retainer or contingency billing. Legal specific software allows for this and more. 

Your bill is a representation of your law firm; it tells a story and should look professional. You don’t want to send your client’s a bill that looks like an auto part store invoice, which is what may result when you use some off-the-shelf software.  

4. Trust Accounting

In an effort to minimize risk of non-payment, more law firms are now requiring clients to provide trust funds to cover fees earned and expense disbursements. Having accurate trust accounting records, bank reconciliation reports and reports of trust account balances by client is a must-have if you are accepting trust money from clients. 

Trust accounting is not taken lightly by local bars – you cannot co-mingle funds or take funds before they are earned or you can face disciplinary action. Legal specific software has built-in safeguards which prevent this, including not allowing a firm to overdraw a trust account, and allowing you to set criteria so you can only apply trust funds to fees or expenses at the time of billing. Some software will print a check directly after billing for the fees owed to you from clients. 

5. Manage Who Owes You

Knowing who owes you money is critical. It’s also important to be able to take a payment and have it applied to the appropriate account and properly reflected as income for your firm. Legal specific billing and accounting software provides you with choices for how payments are applied. This feature is important in cases in which the bill on a matter is being paid by more than one party, or where a payment should be applied to expenses, rather than to the legal fee. 

6. Integrated Accounting – One System

Having a billing system that includes accounting is a plus. It decreases duplicate entry and reduces the potential for errors to occur, while eliminating the need for you to learn yet another software program. An integrated solution provides peace of mind – you know your bills won’t be missing any time or expense. When you write checks, the information will automatically be recorded on the correct reports and will appear on the client’s next bill.
Having all of your firm’s information in one system makes it easy to provide your accountant with the information they need.

Lawyers have unique needs and requirements that must be met in order for them to meet their professional and ethical responsibilities to their clients. These needs and requirements must be taken into account when selecting a billing and accounting solution for your law firm. Review your options and make an informed decision based on your firm’s – and your clients’ needs. 

 
What are you looking for in a legal billing and accounting software program? 

Is Hourly Billing Just a Fixed Fee in Another Form?

Tom Kane of the Legal Marketing Blog wrote an interesting post yesterday entitled, "Has the Hourly Billing Model Become an AFA?" His post points out that even when lawyers bill by the hour, the client will only pay what the client thinks the lawyer's services are worth.

When lawyers write off or write down their fees - or when clients pay only a portion of the lawyer's bill, aren't both lawyer and client saying that the hourly fee really doesn't mean anything, and that there is a particular (fixed) fee that is 'fair' for the work?

What really matters isn't your hourly rate, it's your realization rate (what you are actually paid), and realization rates have been declining.

Bottom line? As I said in the seminar I did at my local bar association yesterday on getting paid, it's time for lawyers to have more in-depth discussions with clients at the beginning of the engagement about what the client expects, what kind of service they are looking for, and what the client values or thinks is important. Whether you continue to bill hourly or move on to newer forms of billing, project management - and management of clients' expectations - is key.

photo credit: http://flic.kr/p/awWdFW

Anticipate Fee Increases to Avoid Ethical Problems - New ABA Ethics Opinion

The American Bar Association Standing Committee on Ethics and Professional Responsibility recently released a Formal Opinion 11-458, Changing Fee Agreements During Representation.

The opinion is just one more reason lawyers need to have explicit conversations with clients at the outset of the engagement about their fees, and especially about the scope of the representation that will be provided for those fees.

Lawyers would be well advised to not only spell out the scope of the services to be provided in their retainer or engagement agreement, but also to provide clients with some guidance about what is not included in the fee agreement and what changes in scope or circumstance would cause a change in the fee.

Lawyers who bill on an hourly basis must also anticipate regular rate increases and advise clients in the original engagement that regular fee increases may be anticipated. Clients may agree to these increases as part of the original fee agreement, without the necessity for the firm to return to each and every client for every regular fee increase.

All of these issues should be memorialized in writing. In addition to having the client sign the engagement agreement, it is always a good idea to have clients initial certain portions of the agreement, such as those describing scope and fees. If the time comes when the fee needs to be changed during the representation or if any questions arise later, it will be easier to point the client (and potentially the court) back to those provisions and the client's explicit written agreement to the terms.

At the first sign that a change in the scope and/or a change in the fee is necessary, the lawyer should contact the client and reiterate those provisions, gaining the client's explicit agreement once again to proceed. If the client refuses to agree to the change in fee and no compromise can be reached at that time, the lawyer may wish to advise the client that they may seek other representation and/or consider withdrawing from the representation. (These conditions should also be enumerated within the engagement agreement).

The ABA opinion emphasizes the necessity that any change in fee be reasonable under the circumstances, and notes that any change in a fee agreement made a significant period of time after the initial retention of the lawyer will be regarded with suspicion, even if the client agrees. Thus, the better (and earlier) the lawyer can articulate the need for an increase in fees, and the more specifically the lawyer can describe the change in circumstances and reasonableness of the requested change, the more likely that the change will be seen as acceptable. 

How Not to Practice Law

The ABA Journal reported this week about an Iowa Supreme Court opinion regarding discipline of an attorney on allegations of misconduct including "trust account violations, misconduct surrounding fee agreements, the taking of fees, failure to satisfy a hospital lien with settlement proceeds, conflict of interest, the unauthorized practice of law, as well as dishonesty, incompetence, and neglect."

The decision includes findings of fact related to four separate client representations. In the first, the lawyer received monies from his client which were considered to be unearned funds in anticipation of work to be done. However, each time he received these monies he failed to deposit them into his trust account, and did not provide the client with invoices or other documentation of the work performed and the fees charged. Not surprisingly, the client fired the lawyer and filed a complaint with the state's disciplinary board.

In the second case, the lawyer represented an estate on a wrongful death claim. pursuant to a contingency fee agreement. The agreement did not specifically state whether litigation expenses would be deducted before or after the contingency fee was calculated. When the case was settled, the lawyer deposited the funds into an improper account and deducted his fee without filing the appropriate paperwork with the court or receiving an order from the probate court permitting him to be compensated for his services in the case.

In addition to representing the estate in the wrongful death action, the attorney was retained to aid in the administration of the estate, whose sole asset was the wrongful death suit. However, (after receiving a notice of delinquency for failing to probate the estate), the attorney filed an inventory noting that the estate had no assets, failing to disclose the proceeds of the wrongful death settlement. The administrator of the estate, upon learning of these actions, sought the attorney's removal as attorney for the estate, noting also a failure to pay claims against the estate and a failure to distribute funds to the heirs.

Following his removal as attorney for the estate, the lawyer returned some of his 'fee' from the settlement proceeds for the wrongful death action and a judgment was entered against him for the remainder. He also failed to return the estate's file to subsequent counsel in a timely manner.

In the third case, the lawyer undertook representation of a client for personal injuries sustained in a motor vehicle accident. Again, the representation was to be on a contingent fee basis, but the attorney failed to prepare a written engagement agreement. The hospital where the client received treatment filed a lien with the tortfeasor's insurer against the proceeds of the suit, of which the attorney was aware.

When the case was settled, the lawyer once again deposited the funds into an improper account and then withdrew his fee, but failed to satisfy the hospital lien and failed to provide his client with an accouting of the settlement proceeds. According to the settlement agreement which was executed, the client was obligated to pay all liens from the settlement proceeds.

The hospital sued the insurer for the amount of its lien, and a third party action was commenced against both lawyer and client. The lawyer then filed an answer on behalf of both himself and his (former) client without obtaining permission from his client to do so. The insurer's lawyer pointed out the conflict of interest in the lawyer's representation of both himself and his former client in the third party action. As a result, the lawyer moved to withdraw the previous answer and filed an answer on his own behalf, asserting cross-claims against his former client.

Finally, in the fourth matter under review, the attorney undertook the representation of a client in a sales tax dispute, despite having already been suspended from the practice for failing to file a required annual client security report. The attorney convinced his client to execute a power of attorney in his favor and accepted a retainer fee from her, once again failing to deposit the retainer funds in an appropriate client trust account. He failed to communicate with the client and did not do the work she requested. As a result, the client terminated his representation and demanded a refund of her retainer and return of her records. He failed to do either, and the client filed a complaint. Subsequently, the attorney refused to turn her file over to the board.

Needless to say, the lawyer was found to have violated numerous Iowa Rules of Professional Conduct as well as some Iowa Court Rules.

The decision says it all when it concludes, "In short, [the lawyer's] handling of his clients' property is a textbook example of how not to operate a law office."

It must be noted that the court did find a mitigating factor in that the lawyer apparently had some short term memory loss stemming from treatment for a brain tumor. However, the court also noted a number of serious aggravating factors, including that the alleged misconduct occurred over a period of years and the lawyer had been previously reprimanded.

Although the general rules seem very basic and straightforward, apparently, they cannot be reiterated too often:

• Heed your jurisdiction's ethical rules
• Be exceptionally careful with client funds
• Set up accounts and deposit client funds pursuant to the requirements of your juridsiction
• Always put your fee agreements in writing
• Communicate with clients regularly, especially when it comes to fees, withdrawal from trust accounts, or accounting for client funds or property in your possession
• Always consider the best interests of clients and former clients first
• Don't ignore or refuse to cooperate with disciplinary authorities

 

Law Practice Profitability

The May 2011 issue of Law Practice Today, titled, Law Practice Profitability: Not Worth Ignoring is now available, and it's packed with tips to help you make sense of your firm's finances.

In Wisdom Through the Ages, George Leloudis compiles tips from such experts as David Bilinsky and Jim Calloway from a recent program on money matters. These include creating an actual budget for your firm (yes, you know you should, but how many actually do it?) developing a financial dashboard to help you keep an eye on the firm's finances and following up on collections.

In this issue, I challenge the idea that you need to keep track of your time in order to determine profitability in: Challenging the Idea that You Need Timesheets to Determine Profitability. It may be controversial, but it's worth looking critically at this practice to see whether it really serves lawyers (or their clients).

When we start talking about law firm profitability, inevitably lawyers begin thinking of ways to cut costs. Molly DiBianca discusses one way to cut costs in How to Save Money Now By Going Paperless.

Ed Poll shows how much lawyers contribute to their communities and reminds us that in order to support good pro bono work, firms must first be profitable in Pro Bono and Profits are not at Odds.

In this month's management column, Linda Klein reminds us that our firm's reputation isn't based just upon the lawyers - the staff counts, too. In Taking the Lead - Having a Winning Reputation with Engaged Employees, she provides some keys to keep employees engaged - because an engaged employee provides good service to clients.

Tools and Tips from ABA Techshow 2011

Last week I did two posts about the ABA Techshow, one focusing on blogs and social media and the other on websites. If you are a reader of the Lawyer Meltdown Newsletter, you also know that the April edition covered many of the tips and websites the Techshow presenters talked about. (If you are not a subscriber, you can subscribe to the newsletter here, or get a copy of the April Lawyer Meltdown Newsletter with the Techshow tips here.)

I won't repeat the same tips I covered in the newsletter, but here are some additional ones that I thought looked interesting. I'm more familiar with some than others, but you can make your own judgments. Keep in mind that many of these programs are "in the cloud," and all have different levels of security and/or encryption. 

Practice Management/Case Management

One of the most common questions I receive from lawyers is about practice management software. In my newsletter I mentioned some of these programs, but here again is a list of programs that help lawyers (especially solo and small firm lawyers) accomplish these tasks.

• Credenza
• Advologix PM
• Clio
• Rocketmatter
• Law RD
• DirectLaw
• MyCase
• Total Attorneys

Billing and Time Entry

Another question I hear frequently from lawyers is about time and billing programs, including programs to help you 'automatically' track your time, particularly on a mobile device. Although I'm an advocate of fixed fees, I recognize that some lawyers (through no fault of their own) cannot escape from hourly billing. In that case, you might try:

• Time59
• Timesolv.com
• Blacktrack.com (for Blackberry users)
• TimeClock (for Android devices)
• TimeWerks (for iPhone)

Document management and automation

While HotDocs is one of the most popular, you'll need to spend $800 to get the developer version of the software to create templates). Consider Pathagoras, at $379 for a single user, which will allow you to create templates and forms. You can also consider these additional document automation programs:

• WhichDraft.com (for contracts)
• Exari
• Wizilegal
• Rapidocs (part of DirectLaw)

Dropbox, Netdocuments and Sugarsync are all programs that can help you manage documents, synch between multiple devices and share documents with others

(You can also look at the recent Andy Adkins report/comparison of practice management software here).

Password generation tools

Almost every time you do something on the web these days, you need to create a password. With all of the efear about identity theft, it's wise not to keep using the same passwords over and over. But how do you generate new passwords (and remember them) every time? Try a password generation tool like LastPass or 1password.

Project management and collaboration

The new 'buzzword' in the legal industry, project management has become a big deal in part because of the increasing popularity of unbundled legal services and fixed fee arrangements, as well as the vigilance of clients who are more concerned than ever with ensuring that they get value from their legal spend. Some programs to help lawyers with managing projects for and collaborating with clients include:

• Basecamp
• PBworks
• Zoho
• Onit

(Thanks to the presenters at ABA Techshow, and Steve Matthews and Tom Mighell in particular, for many of these tips)! 

Do Something! Improve Cash Flow

One of the biggest issues law firm owners face is the issue of cash flow, and it's an issue that has been getting even more attention lately as a result of the 'down' economy. I tell my clients that every issue related to billing, fees or getting paid relates back to the initial meeting with the client. You need to know how to talk to your clients about money, how to articulate the value of your services and how to make it as easy as possible for them to pay you.

It sounds simple - especially the last part - but too many law firms resist it. They think conversations about money are unprofessional. And taking credit cards is considered particularly unprofessional. But if you look up the definition of "professional," you'll see that in addition to being related to a 'profession,' being a professional means being paid for doing a particular activity or type of work, rather than merely engaging in it as a hobby. Under that definition,  if your clients can't - or don't - pay you, are you really a professional?

Of course, credit card acceptance isn't the only way to make it easy for your clients to pay you. But if you take up front retainers (and many lawyers should), your clients may not have cash on hand to pay you, particularly if you practice in an area in which the client's legal expenses were unanticipated (such as criminal law). Clients are used to paying with credit. They may not be able to 'afford' to give you a check for that $5,000 retainer, but that won't stop them from using their credit card to buy that new flat screen TV. Why shouldn't you keep that client if they have the credit available to pay you?

Payment solutions that make sense for lawyers

Lawyers have specific ethical responsibilities and rules with which they must comply, and these rules and responsibilities are unique to lawyers. It is important to be mindful of these rules when choosing a payment processing company to work with and choosing payment options for your firm.

I recommend that you seek out a company that has experience working with lawyers, that understands lawyers' ethical obligations and that knows the difference between an escrow or client trust account and a firm operating account - and has products that understand those differences, too. One such company is Capital Payments, who recently launched a new website, Lawyer Payments, that exclusively addresses the payment needs of law firms. Their Escrow Management program can help lawyers create payment systems that work for them, and their credit card acceptance and electronic check options can also help improve cash flow.