It’s always struck me that there is often a disconnect or lack of understanding with fee earners between the time they charge on their timesheets and the funding of a law firm. In the majority of firms, time recording systems continue to be used and I’m not going to get into a discussion now about whether that’s out of touch, appropriate or useful – that can be covered another time. Fee earners, from day one, are taught to record time and quite often are driven to do this merely by a chargeable hours target.
The concept of meeting your annual budgeted chargeable hours to be paid a bonus at the end of the year is still quite common and it’s clear what kind of behaviour that will drive. Until a fee earner assumes billing responsibilities, it is unlikely that they will be aware of the impact of their recording of time either on the firm’s financial results, the consideration to the level of fees to be charged, the timing of that billing and, ultimately, of when the bill is paid. Further, it may even be that when a fee earner assumes such responsibilities, they are still not aware of the effect on all of those areas. The sooner they are made aware of all relevant factors and implications, the better.
- Do they understand that 80% recoverability effectively means that for each week worked, one day is just not worth anything in cash or profit? In fact, it has a negative impact since the team are still paid for that fifth day but there is no income generated.
- Do they understand that it’s impossible to tell what level a fee should be set at if chargeable hours aren’t accurately recorded?
- Do they understand that it is difficult to gauge whether the team or firm is under (or over) resourced if chargeable hours aren’t reliably recorded?
- Do they appreciate the time lag between time costs and indeed disbursements being recorded, the team and disbursements being paid until the bill is actually settled and therefore do they understand the impact on the firm’s funding position?
In my view, there is a significant training opportunity for fee earners to assist with the firm’s financial reporting and the firm’s profitability and funding position. This training can be provided for more senior fee earners, sometimes even partners, where there has been a lack of financial training through their career or where a fee earner is just starting out. If you think that there is an opportunity for improvement in your firm or that a refresh would be helpful, please contact me at email@example.com or call 0161 641 8684.