Does your firm track non-billable time, or is it simply considered not worth the trouble?
Every time we install Smart Time, this issue comes up. What we see again and again is that most large law firms track non-billable time, it’s a mix for midsize firms, and we’ve yet to see a small firm that tracks it at all.
My take is that large firms perceive that the data captured over a timekeeper’s entire day—billable or not—contains volumes of information that can help a firm strategize, incentivize and otherwise improve management over both the employees and the resources of the firm. Indeed, many industry experts have considered tracking non-billable time to be a best practice.
While I used to think it worthwhile to track non-billable time, I’ve now changed my mind. I’ve seen what the large firms do with non-billable data. Almost nothing. I suppose you might cull some nuggets out of the data that can improve firm operations. But are the nuggets worth the pain you inflict on your timekeepers to track this time?
Let’s walk through this shift together. First, we’ll define exactly what non-billable time is, and then we’ll quantify how much non-billable time actually exists. And finally, I’ll wrap it all up for you.
What Is Non-Billable Time?
Non-billable time typically falls into four broad categories:
- Business Development: This includes pitching new clients, writing proposals and client entertainment.
- Training: This category is for continuing professional development and in-house firm training.
- Non-Billable Legal Work: Research and knowledge management.
- General Administration: This includes supervising, mentoring, department meetings, firm administration and billing.
As a note, pro bono time is not included in this analysis.
How Much Non-Billable Time Actually Exists?
We have looked at many law firm time databases. We have found, on average, an attorney spends 1 hour a day or 235 hours a year on non-billable matters across the four categories of business development, training, non-billable legal work and general administration. Depending on if you are a partner or associate, your time will be spread differently across these categories.
Think about it this way. For your timekeepers, participation in the non-billable categories is just about mandatory. If you are a partner, you have to do business development and you have to bill. If you are an associate, you are bound to do non-billable research and attend department meetings. And everybody has to satisfy CLE credit, so training is mandatory too.
So, when you subtract all the mandatory time that a person has to do, you end up with a very small pocket of elective time left to analyze. Say the elective pocket represents 30% of total non-billable time, which works out to about 70 hours per person per year. A reasonable person in law firm management has to ask: What actionable insights can you possibly find in these 70 hours? Is it worth it to have everybody track time for this analysis?
Not Enough Gain, Lots of Pain
I contend there is not enough low-hanging fruit in those 70 hours to make much of a difference to your firm. What you gain (if anything) does not justify the pain you inflict on every one of your timekeepers. There’s a world of difference, between having the data and using the data.
My recommendation? Streamline your timekeeping process and stop tracking non-billable time.