Maximising the impact of time recording
The relationship has changed between law firms and their clients. Following the 2008 financial crisis, law firm clients are hiring legal operations officers whose main role is to manage the relationship with outside counsel and ensure “value for money”. Clients are rejecting hourly billing and new arrangements such as fixed fees are putting a lot of pressure on law firms. As law firms compete against each other more than ever on the pricing of legal services, it is vital to have an accurate picture of costs, efficiencies and quality. The time recording process is at the heart of capturing the data and using it for competitive advantage.
The invoice more than ever before is a key representation of the relationship between a law firm and its client. At one time it was backward-looking but it is now front and centre of the relationship. The invoice is the main document of communication between the law firm and its client, setting out the time spent on tasks. Increasingly, that invoice has to demonstrate quality, accuracy and timeliness all of which contribute to “billing hygiene”
Greater transparency, accountability and opportunities
Time recording has always been an essential aspect of law practice and billing. Now, however, law firms are looking even more closely at the opportunities it presents. For example, clients are increasingly interested in being able to access time recording data in progress, even in real time, and law firms and professional services practices that are able to do this and meet the demand for data can offer a real competitive differentiator.
As law firms open the door to their data sources, the pressure is on to make that data accessible and accurate. This scenario is night and day compared with the service most law firms offered only a few years ago. Yet, if the law firm fails to adapt and take real steps to offer access to data, or gets its approach wrong, there will be serious repercussions. The law firm may be left having to justify outdated or inaccurate fee arrangements or may no longer be competitive because failure to cost accurately can result in miss-quoting their services.
A relationship that was once based solely on the intellectual capital of a firm’s top lawyers has transformed to one that is largely transactional and data-based. When it comes to highly complex cases, specialist expertise will continue to trump any other factor. However, in most law firms more than half of the work is by nature routine commodity work, and it is in the competition to offer those services that the latest time recording technology can deliver real value.
Law firms who are proactive in offering their data externally to clients will be those who succeed. Here are three key tips to maximise the value of time recording processes:
- Ensure that everybody in the firm, from admin assistants and paralegals upwards, understands the importance of creating high quality data and that the data leaving the premises will have a major impact on the relationship with the client. Everyone must contribute to the quality of time recording data
- Use all the technologies available to enable effective contemporaneous recording of time
- Review the process for monitoring and measuring via metrics the quality of time data at an early stage
If you find yourself assessing the quality of data only after an invoice has been reviewed by the client it is too late. According to Thompson Reuters statistics for the first quarter of 2016, collective realisation rates have hit 82.2%, a new historical low for the industry. While law firms continue to focus on collection rates at the end of the “work to cash” process they are often missing the fact that accurate recording at the beginning of the process (i.e. work stage) is the root cause.
As the law firm focuses on high quality time recording data, this will create a valuable feedback loop. Employees and partners will increasingly evaluate the value of the work they are carrying out for clients knowing that they are recording it in real time. This strong sense of the client’s presence will drive an enhanced service, allowing the law firm to demonstrate high value in the quest to win and retain business.
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