|Image [cc] Mike Licht, NotionsCapital.com|
Recently Lexis released its findings from a new survey on Non-Billable Hours. Lexis had previously done a survey on Billable Hours and their curiosity lead them to the second one. Both surveys focused on the solo / small firm market with firms of 20 or less lawyers. I was able to talk with some of the Lexis people to get a better sense of what they found.
First they shared an interesting finding: Lawyers spend their non-billable time on practice management and admin tasks. And they do this over and above efforts on client development. Why is this interesting? With all the talk about LegalZoom and threats to the legal market you would think lawyers would be refocusing their efforts, but alas, they are not.
Years back when I did presentations on law practice management 101 I would hammer on the theme of focusing on revenue instead of expenses as the Path to Profitability. All these years later, lawyers still devote too much time to admin tasks. My advice – hire someone to perform these tasks (or outsource it). Your time is worth a lot more than that.
Lexis also shared with me the rankings of which practices have the least amount of non-billable time per day – averaging about two hours. The top three: Insurance Defense, Labor and Litigation. As well, they shared those with the most non-billable time per day – about four hours: Personal Injury, Criminal and Immigration. I then shared my perspective on that list. The practices that ‘waste’ the least amount of time on non-revenue generating activity are those most driven by the billable hour. All three of these ‘efficient’ practices have rate pressures and bill primarily by the hour. The most inefficient practices bill with Alternative Fee Arrangements (AFAs) using contingency and fixed fees.
Now this may appear to be counter-intuitive as you might think AFAs should drive efficiencies, but I think it makes perfect sense. Lawyers wearing a billable yoke around their neck constantly fill the need to respond with billable hours. Those without it are much less compelled.
So I guess the lesson here is that making people’s income subject to them working harder seems to work. Now we just need to help lawyers understand that there is a bigger reward for working smarter.
Which brings me back to where lawyers spend their non-billable time. My advice: If you are a lawyer with two to four hours a day to spend on non-revenue generating activity, spend it engaging clients.
[This experience advanced my appreciation for Jeff Carr’s frustration. He is tired of talking about the need to utilize AFAs. He’s been doing it for years and no one seems to be listening. I’m feeling much the same way. Jeff, Next time we meet – I’m buying.]