Memorization is a great skill for a lawyer, but when it comes to time tracking, memorization is a thing of the past.
Time tracking is a key element in how you run your law firm. By billing accurately, you are paying yourself for great work, not overcharging your clients or undercharging your services. Accurate time tracking also improves billing productivity.
If your billable hour law practice has plateaued, then changes are needed to increase your firm’s revenue. If you don’t know where to start with the billable hour or if you are looking for new ideas to maximize the billable hour, then learn how to improve this type of billing structure.
What is the billable hour?
“*The idea of a lawyer recording time was first conceived by attorney Reginald Heber Smith in 1914. Smith ran a legal aid society and wanted to track hours to ensure legal services were being provided efficiently. Although lawyers first began recording time in 1914, the billable hour was not a common billing method until years later. For most of the twentieth century, lawyers “eyeballed” their bills, essentially determining fees based on the assigned value of services and not on the amount of time it took to produce the service.”
Hourly billing is used to bill for work that can be charged to the client. Examples include planning and researching projects and communicating with the client through email, phone, or meeting in person. The more hours that are billed, the more money the law firm can make.
Why the billable hour?
Billing hourly can build customer relationships as the client knows what to expect and there aren’t any surprises when it comes to client invoicing. It’s also the most accurate way to keep track of tasks. The last thing you want to do is overcharge or undercharge the client for your services.
The billable hour can also be used to measure the performance and efficiency of team members.
Managing the billable hour
New processes means new adjustments and managing the billable hour is no different. A few tips to help you manage the billable hour include:
- Setting up your invoice schedule so there are no surprises for you or the client
- Finding a time-tracking software that is easy to use
- As soon as a task is complete, record it
- Once you can decipher billable work vs non-billable work, you can learn to delegate non-billable (or admin) tasks to others
- Setting expectations and establishing your rate
- Using technology to streamline this process
Your time and energy are important, but so is accurate time tracking. Accurate time tracking sets your law firm up for success. In this process you can discover inefficiencies, where to focus your time, and set up proper and reasonable pricing strategies. Spend your time on things that matter and decide if the billable hour makes sense for your law firm.