If your firm is implementing alternative fee agreements, does that mean your attorneys can stop keeping time? Alas, as idyllic as it sounds—a world without clock-watching—the fact is that AFAs still require, and, we assert, even demand more attention to time.
True, the recorded hour is no longer necessary for billing in an AFA. But there are plenty of other applications for firms that wish to maximize efficiency, productivity, client-firm relationships and profits.
Recorded Time is Still Your Friend
Measuring time, especially when the records are incredibly accurate and complete, gives you extremely valuable information about your firm, your timekeepers and your clients. No matter your billing structure, giving up this information means losing an edge over your competition, not to mention a loss of insight in ways to improve overall productivity and profitability.
Here is a list, by no means exhaustive, that demonstrates why time is still an essential metric, even for firms utilizing flat-fee billing.
- Measuring timeliness and compliance. Project managers still need a tool to evaluate how timekeepers are performing with regard to a project’s expected timeline.
- Planning for estimates. While your client may perceive flat-fees as a good value, you must make them valuable for the firm, by accurately estimating to cover your costs and make a profit. Looking at previous time investments will help you to know exactly how much time it takes to perform specific tasks.
- Client trust. Many, if not all, clients will still want the ability to monitor and check in on the engagement, and hours are one good way to do that. AFAs don’t do away with client-firm discussions on the progress of the matter.
- Keeping to budgets. How else can a timekeeper review and stick to a case or matter budget, if they don’t know how much time they’ve spent on it? In an AFA, following budgets strictly is key.
- Measuring profitability. Without timekeeping its impossible to measure the profitability of the engagement. Hours are still the best measure of cost. Understanding how much it costs, in time, to complete the engagement changes a firm’s focus to efficiency and value.
- Continuous improvement of the AFA model. If you track time, you can refine your pricing based on increased understanding of costs and clients’ needs. Potential pricing systems might contain inclusion of some hourly rates, as well. Just remember to keep any pricing system easy for the client to understand.
- Rules of professional conduct. If you end up in a fee dispute with your client, you’ll need hours expended to defend your position in court.
It Boils Down to Information
By now it should be clear that timekeeping in an AFA environment is a very good idea. It can settle questions of productivity, efficiency, profitability and competitiveness, among others.
We’ve asserted that AFAs make timekeeping even more important than in the billable hour model. Why? Because in this competitive market, the firms with the greatest insight—i.e., the best, most complete internal information—are the ones most likely to succeed both on the economic front and the client satisfaction front.
In fact, going without this information while implementing an AFA model is not just giving up a luxury on a ship that’s otherwise well-stocked. It’s akin to setting sail for distant shores with no idea if there are enough provisions and rations to see you through an uncertain journey. While the rewards of the AFA model can be high, the stakes are also high.
The only reason people dream about AFAs doing away with timekeeping is because it has always been so painful. Take away the pain with technology, and there is no reason to give up such valuable information.