For law firms, time is quite literally money. With a finite number of billable hours in a day, the way you structure, track, and plan for time can make a significant difference in areas across your legal practice.
Beyond accurate time management, incorrect timekeeping has far-reaching consequences for:
- Company profits
- ABA compliance
- Staff management
- Client trust
The best way to improve all of the above? Accurate time tracking.
Six benefits of accurate time tracking
Time tracking is key to accurately staffing and allocating resources for every facet of firm operations. Let’s get more specific, though. Here are six major benefits of proper time tracking, and how you can step up your system today.
1. Better matter budget
Because law firms build matter and case plans based on previous experience and knowledge, it can be difficult to scope projects correctly without accurate background information for similar tasks. If your firm chronically under-tracks time, then team members will consistently fall victim to underfunded projects and impossible timelines. This can also negatively impact the client experience (and ultimately, client satisfaction).
Under-tracking time doesn’t just impact billable hour projects, either. For non-billable business operations, under-budgeted projects lead to wasted work, inefficient systems, and poor project rollout.
No matter how you frame it, knowing how much associate and partner time is needed for a project will have a significant impact on a matter’s overall success. Otherwise, you may not have the time and resources you need to succeed.
2. Allocate resources accurately
Similar to budget allocation, historical project data is critical to accurately allocating resources for billable and non-billable initiatives in a legal practice. An underestimated project will take up more than the projected time, costing the firm more money and potentially leading to stressful working conditions for attorneys and staff.
On the other hand, if a firm overestimates necessary resources, it can have the opposite problem. Projects can be overstaffed. If staff time isn’t allocated correctly, it can cost associates and partners much-needed billable hours. What’s more, other client work may suffer and profitability can decrease across the board.
3. Set profitable rates and fee structures
Many firms provide different fee structures to cater to client needs, including flat fees, retainers, fee splitting, and contingency.
If your firm uses flat fees or task-based billing, your profitability depends on accurately pricing your services based on how much time a matter will take to resolve. Without accurate time tracking, you could be severely underselling your services. It’s as simple as that.
4. Maintain compliance with ABA regulations
Per the American Bar Association, improper tracking of billable hours can lead to serious ethical dilemmas, disciplinary measures, and even disbarment.
It’s important to note that compliance matters for every team member, not just partners. According to Model Rule 1.5, firms can only charge reasonable fees (the definition of which varies based on several factors). If an associate charges a client unreasonable or padded fees, they are accountable for their actions, even if they were directed to do so by a supervising lawyer.
To keep this issue to a minimum, the ABA suggests that legal staff, especially new lawyers, take care to review bills to avoid allegations of padding, especially when logging time for multiple cases at the same time.
The ABA’s top tip for compliance? Use a desktop- and mobile-friendly time-tracking tool as part of a larger practice management system for accurate billing practices.
5. Improve client relationships
As previously noted, padded fees and invoices are a serious breach of ABA regulations. Beyond the risk of disciplinary measures, improperly tracked time can compromise client trust.
Trust is the cornerstone of strong client relationships for a law firm. Clients come to law firms to deal with serious and often stressful legal matters. They need someone they can trust to resolve their matters. If your firm loses that trust via padded billing practices or unreasonable fees, that trust is nearly impossible to get back.
On the other hand, consistent, transparent time tracking and fee structures promote open and honest communication which will lead to increased client satisfaction stemming from the level of transparency regarding pricing. This level of understanding fosters mutual trust, which is key to a law firm’s long-term growth.
6. Better understand your staff’s performance
Time tracking is an important measure of efficiency and productivity, and it tells you how much staff worked on specific projects, or with certain clients. In addition to the numerous issues listed above, inaccurate time tracking can hinder your firm’s ability to support staff who may need more help and reward staff who go above and beyond.
All of these factors play into performance reviews, employee recognition, fair compensation, and keeping track of potential high or low performers at your firm.
How to improve your firm’s time-tracking system
The biggest way to improve a firm’s time-tracking system is to implement automated time tracking throughout the day, rather than tracking time at the end of the day or week.
According to the ABA, lawyers who wait until the end of the day can lose 10% of their billable time. For lawyers who wait until the end of the week, that number goes up to a 25% loss of billable time.
By tracking time throughout the day, team members gain an accurate picture of their billable hours. But tracking via paper and pencil can be inefficient (and easy to forget). Instead, consider working with legal practice management software with integrated time tracking. For example, Tabs3 Connect allows lawyers to track their time on any smart device, and easily switch between projects or pause for breaks.
As an added bonus, Tabs3 Connect’s time tracking seamlessly integrates with Tabs3 Billing. As timekeepers track their work throughout the day, the fees will be immediately available back at the office, ready to appear on your client’s next statement. This saves time compiling client invoices each month, while still providing easy editing capabilities to ensure accurate client billing.
Simplify your time tracking with Tabs3 Software
Time tracking doesn’t have to be complicated. Simplify your system and see the results for yourself with Tabs3 Connect’s timers, accessible from any smart device, no matter where your work takes you.
To see how Tabs3 can help transform your time tracking and firm productivity, schedule a walkthrough demo today.