By Steve Bronstein, Director of Client Services – SmartTime at Legal Futures Associate BigHand
With FY23 kicking off, one of the hottest topics in the legal industry is how law firms can maintain and maximise profitability during a time of high inflation and a looming recession.
The current financial climate has led to many clients looking to cut costs where possible and retain a more efficient legal service. One way in which law firm clients are looking to improve efficiency is through gaining greater transparency from their firms on matters while improving accuracy on the amount of time being spent on billable hours. On the other side of the coin, as they juggle practicing law with profitability, firms are equally looking to increase billable hours to improve revenue.
From BigHand’s latest financial report, 96% of NA and 98% of UK firms are targeting increased billable hours to off-set increasing write offs. The report shows over a third (37% of NA & 26% of UK) firms plan to improve billable hour entry over the next two years and 36% of NA and 24% of UK firms will improve financial data visibility to gain insight into the issues leading to profit leakage.
It’s clear from the data we can see a clear shift in mindsight in the legal industry with more focus being placed on profitability and reducing losses, with a key area of concern in almost all firms on billable hours.
For most firms, tracking billable hours accurately can be difficult without a timekeeping tool. When billable hours aren’t tracked correctly and inaccurate figures are provided to clients, it can lead to detrimental effects on relationships with clients and their level of trust. Not only is this a major concern but when billable hours are not accurate it can also lead to huge time wastages and reduced efficiency. One study found inaccurate tracking of billable hours lead to on average each person at a firm losing up to $50,000 in revenue per year due to incorrect billable hours and not tracking tasks such as emails or phone calls.
With these concerns and clients expecting great efficiency from firms, can they really afford to be losing revenue sources simply due to poor timekeeping? Every uncaptured second can leave firms with profitability losses. However, through digital support, firms can improve billable hour timekeeping and get accurate results of how much time lawyers are spending on tasks.
Accuracy through automation
Through time-keeping technology, firms can automate time entry for all billable tasks. With AI automation, you can accurately track what activity has been completed, the length of time it took and who worked on the task. With this in place, errors on time keeping never enter the billable system, and firms can save time in reviewing and editing that would normally be needed before with a manual process. With this increased efficiency, law firms can create more accurate prebills, helping to improve profits that lawyers spend considerable hours on earning.
When using a legal timekeeping solution, you have the flexibility to configure “auto-narrative features” which allow the user to present the exact language they want the system to use when populating time entries. These auto-generated entries are flexible when configured and are consistently worded depending on the activity such as client engagement tasks. This reduces the level of vague wording being used in time entries which lack the proper description of what the task is for leading to confusion.
Transparency for clients
As mentioned before, clients are demanding greater financial transparency on matters and want visibility that more time is being spent on billable tasks. If lawyers are tracking their billable hours at the end of the day or even the end of the week, it can lead to inaccuracy and inconsistency, which are then communicated to the client. This can lead to overbilling or underbilling on legal services. Many small tasks like opening emails and document edits are often forgotten when creating billable hours and when they aren’t communicated to clients you cannot maximise revenue. When using a timekeeping solution, all documents like compliant invoices are created with accurate, AI automated data helping to provide clients with greater transparency on their legal services. This helps to build trust that’s necessary to demonstrate the value of your service.
In using a timekeeping solution, like BigHand SmartTime you can improve efficiency and reduce revenue losses. Through automating time captures and time entries law firms can accurately streamline their timekeeping process. To learn more on how BigHand SmartTime can help you firm, schedule a demo, or book a discovery call with one of our experts today.