toddgersteinBy Todd Gerstein
CEO, Smart WebParts

You have a clear timesheet policy, a great time recording system and a firm full of hard-working attorneys. Why then, do you still need someone to be the timesheet “enforcer” and chase after people to turn in their timesheets on schedule?

Though attorneys find it painful to record their time, it is still essential to the business process. Primarily, of course, it is the first step in the billing process that turns hours into revenue. It also serves to aid the firm in delegating work assignments, evaluating employees, calculating profitability, gaining insight into operations and finding efficiencies.

So, why don’t attorneys submit their timesheets in on time? Two words: culture and behavior.

Culture & Behavior

Let’s tackle culture first. Some think the most effective way to achieve timesheet compliance is to make it cultural. Everyone, from accounting staff to assistants to the attorneys and partners, understands and accepts that it is a firm priority. No sticks or carrots—it’s just part of being at the firm.

Or, viewed from a slightly different angle: You have all the right tools, great people and clear policies, but if the firm environment and culture do not communicate that on-schedule timesheets are a priority, chances are good that late timesheets will endure as a problem.

I’ve observed that culture alone does not work in most firms. It’s not that your attorneys don’t want to submit their timesheets on time. It’s that their behavior is based on a sense of what’s most important.

For whatever reason, those who consistently turn in late timesheets have decided that on-schedule timesheets are not important. All you have to do is make them important. In other words, you change the timekeeper’s priorities by raising the stakes of non-compliance appropriate to how serious you are about wanting timesheets in on time.

So, what are your options for behavior modification? Sticks and carrots. What follows is what we have learned about timesheet enforcement at AMLAW 100 & 200 firms from firsthand experience, news reports, or input we have gotten from colleagues in the industry.

The Sticks Approach

Unfortunately, it is true that some people only respond when they feel pain. With that in mind, here are some “sticks” we’ve seen adopted in firms.

Pay Cuts

This approach hits delinquent timekeepers where it matters most: the wallet. We have seen two Biglaw firms recently expose their plans. From the Simpson Thatcher policy handbook:

Maintaining daily time records is very important to both the firm and our clients, as it directly impacts the firm’s ability to administer work assignments and to bill clients on a timely basis. If a lawyer is missing ten business days of diaries prior to any payroll date, the lawyer’s gross salary will be reduced by twenty percent prospectively for the next pay period. The reduced salary will continue in effect until diaries are no longer ten business days in arrears by a payroll date. Restoration to the prior salary will occur in the pay period following the pay period in which the lawyer’s time records are once again current, and retroactive restoration will only be made in exceptional and rare cases, such as in some situations of personal or family illness or emergencies, with such reimbursement to be approved in writing by a co-chair of the Personnel Committee. If a lawyer has any reason to believe that he or she will be unable to complete time records in compliance with this policy, the firm expects that the lawyer will raise the matter in advance.

Hughes Hubbard is the second major firm to have their timekeeping enforcement policy exposed in the press. The policy proposes irrevocable docks in pay for timekeepers whose time is more than five days late.  Here are the key paragraphs of the Hughes Hubbard policy:

 We are implementing a new approach to the issue of late time: if a timekeeper has more than five business days of late time prior to any payroll date, the timekeeper’s gross salary will be reduced by 5% in the first instance, prospectively for the next pay date. The reduction will be increased to 10% in the second instance and to 20% in the third instance and any subsequent instance. The reduced salary will continue in effect until the timekeeper’s time is no longer more than five business days in arrears by a payroll date.

There will be no retroactive restoration of a timekeeper’s reduced salary unless, in the discretion of the Chief Operating Officer or his designee after a showing of exceptional circumstances, the Chief Operating Officer or his designee approves an exception in writing. If a timekeeper has any reason to believe that he or she will be unable to complete time records in compliance with this policy, the timekeeper must communicate this in advance to the Chief Operating Officer or his designee.

In addition to pay cuts, we’ve seen these twigs added to the mix:

Cancel Direct Deposit

Cancel late timekeepers’ direct payroll deposit for six months.  Force the offender to go to the managing partner’s office to pick up their paychecks.

Cut Off Computer Access

If a timekeeper is late on timesheets, the IT department shuts down their computer. When they attempt to use it, every application is locked down except time entry. After they enter their time, they report it to the accounting department, who gives the IT department the high sign to turn the computer back on.

The Carrots Approach

If the positive approach is more your speed, these tactics have been implemented by other firms to motivate compliance:

Giveaways

Everybody loves “free.” This approach gets people to think of their timesheets as a means to an end.  At year end, Brown Rudnick offered its timekeepers a fun reason to get their time in for the year end close. Here is an excerpt of the Brown Rudnick memo:

1. Attend the Effective Billing Practices training on Monday, December 6th at 12:00 p.m. EST/5:00 p.m.GMT;

 2. Follow “best practices” for all timekeeping entries (as described in the December 6th training session); and

 3. Submit your time daily from December 6th – January 31st in accordance with our timekeeping policy.[Redacted] and his team of experts will determine whether timekeepers are following “best practices” (including submission of detailed, informative descriptions of the individual tasks performed and the amount of time spent on each). All eligible timekeepers will be included in a raffle for 24 iPads! Winners will be announced no later than February 7th.

The Disappearing Bonus

Here’s the positive spin on the wallet approach, and one which reminds employees, each week, that there is a consequence for their choices and behavior:

Each January, every employee begins the year with $1,000 in a special bonus account, payable at the end of the year. Each week where there is a missing timesheet, one hundred dollars is deducted. At the end of the year, whatever amount remains is added to the final paycheck.

Embed Compliance into Important Firm Metrics

This is the method I like best. A mix of culture, sticks and carrots. It came from a CFO at an AMLAW firm.

 We carefully monitor time entry — our policy is weekly (time through prior Friday due Monday; end of month due at the end of the first business day of the following month). The number of appearances on late time reports is a financial statistic that is considered along with all other metrics (e.g., billable hours, realization, etc.) at every opportunity — associate raises and bonuses, partnership consideration, partner compensation committee, etc. There are also economic sanctions to equity partners, both on a weekly and monthly basis.

It has taken us many years to obtain the buy-in and cultural acceptance of these policies. It is a very difficult but imperative process.

Conclusion

Given that most people aren’t usually motivated by firm culture alone, it’s my view that the most effective approach is a mix of culture, sticks and carrots. As you’ve seen from this post, there are many potential paths, each of which offers its own advantages and drawbacks.

The first challenge is to realistically appraise what your firm’s culture is, and whether you need to make any changes to that culture to get employee buy-in on new or changed policies. Recognize too, that for your attorneys, timekeeping is a painful process, so anything you can do to acknowledge and attempt to reduce their pain will go a long way toward achieving this buy-in.

Then, of course, you need to decide what compliance measure best fits your firm, and pursue it, expecting that it may be an experimental process that requires patience and tenacity.

Whichever path you go down, the key to an effective policy is embracing it at every level and remaining consistent regarding expectations and enforcement.  Changes in culture are some of the hardest to initiate, but can be some of the most worthy your firm can make.