Guest Author Post
Knowsley Management Services
Many thanks to Todd Gerstein from SmartTime for his recent analysis of the value of law firms tracking non-billable time (what I much prefer to call FirmTime™).
Todd indicated that he used to advocate tracking FirmTime™ but has changed his mind…his most useful thoughts can be found here.
I’m delighted to reassure those interested in law firm profitability that I remain very firmly in the opposite “camp” so to speak.
I’m very aware that many firms, not just the large ones, do not usefully analyse the data they collect on FirmTime™, but to me that just indicates that they really have no idea of its value. Far from stopping tracking it, they need to get real, properly calculate its value, plan it properly, and act wisely on the information made available.
Todd made clear that at SmartTime they had not yet seen a small firm that tracks non-billable time at all. By contrast at KMS we are not happy to bring our nearly fifty years Legal Profession experience to assisting firms with improving profit if they won’t properly plan utilisation of this vast resource, team member by team member, track the information, and act sensibly upon it.
Each client firm does it, and benefits hugely from it.
Simply put, firms that are smart enough to plan FirmTime™ utilisation make a lot more profit than the big majority of firms that do not do it.
Why is this?
As Todd rightly explains, FirmTime™ falls into a number of categories. He reasons that since in most firms so little is elective, it’s not worth the effort and angst capturing all the investment.
Unfortunately, human beings being what they are (and almost all lawyers are human :-)) there is a huge gulf out there in the trenches between what is planned (mandatory or not) and what gets done.
The 2017 Clio Legal Trends Report identified that less than 2 hours of the average lawyers 8 hours/day in US firms actually gets recovered!
That’s a lot of time every day that is supposedly invested wisely in activity not directly related to clients’ existing legal matters.
Regrettably, the wise investment simply does not happen in the vast majority of lawyer’s days, and the time allocated, and hoped to be sensibly invested in pursuance of the firm’s business plan, is almost universally wasted.
The challenges facing most of the Profession are way too great to begin now planning and monitoring human resources utilisation less meaningfully…quite the reverse.
Knowing that firms that do it properly make considerably better profits, and are financially more healthy, giving them the extra resources, and, frankly, the energy, to deal effectively with the changes constantly coming down the pipeline at the Profession, should rattle a few cages.
Lawyer and paralegal resources are simply too expensive for any well-managed practice to waste, and let’s get real, the waste in many firms is quite a big multiple of the current profit.
Resources better invested that improve Revenues by 10% will typically improve profit 100%, and 10% improvement is in Australian slang a “lay-down misere”…an easy victory indeed.
The simple graphs that follow track the improving Raw WIP generation of a small legal firm once it implemented WorkPlans™ (mini-Business Plans), to assist team members and the firm understand the true capability of each person if working effectively on the right things for the right proportions of the year. FirmTime™ is the first resource planned.
After being in the Legal Profession for nearly 47 years, and consulting exclusively to lawyers in small-medium firms for over 29 years to date, I am certain that these sorts of improvements cannot happen without planning and carefully tracking FirmTime™.
The sooner we stop pejoratively calling it non-billable time the better…as if the only useful time is billable time. On this note, one PMS supplier had the “very helpful” approach as recently as four years ago, of labelling FirmTime™ “Wasted Time” in its new software!
There are incalculable billions of dollars being wasted every day across the globe by law firms not being wise enough to understand the value of FirmTime™, and to plan and track it usefully. It’s why profit in so many firms is so poor.
Switching to a proven system of sensibly doing so very quickly delivers a firm’s share of those hitherto wasted billions!
About the Author
Rob Knowsley LLB. Rob has been involved with the Legal Profession since 1970, and has spent most of his career working with growth-oriented practices.
He founded Knowsley Management Services (KMS) in early 1988 after practising from his Admission to the Bar in 1974. Rob is passionate about assisting his fellow lawyers to benefit from building into their firms a strong ongoing capability to optimise their investments of education, money, time, and experience…to produce genuine profits from the high quality services they deliver.
With a great depth of background in private practices, from small towns to major cities, and in Government roles, and his experience consulting to over 1345 firms in the last nearly 30 years in Australia, New Zealand and Canada, Rob truly understands how to make big improvements in all manner of firms in relatively short periods of time. His seminars and workshops are always informative, entertaining, stimulating and energising. KMS website www.lawfirmprofit.com