Why is time recording so important? Peter Scott Peter Scott Consulting .

Why is time recording so important?

Peter ScottPeter Scott Consulting www.peterscottconsult.co.uk

PETER SCOTT CONSULTING

Terminology

Matter related time √

Not chargeable time X


“Recording time is not relevant to our business”

A conveyancer


Recording time is relevant to EVERY part of a law firm’s business


The importance of matter related time

A major profitability factor

An important management tool


A major profitability factor


Profit = difference between revenue and overheads

If your overheads can be kept constant, then all additional revenue is profit

Building revenue in a law firm is the key to improving profitability


Building revenue - Beware The ‘Triple Whammies’

Under pricing Under recording of time Under recovery of time

They can seriously damage your profit.How can recording time help?


Under Pricing


How much will it cost me?

- fixed price / estimate?- charge out rate?


Are we pricing for profit?

How do we know we are pricing our work for profit if we do not know how much

our work is costing the firm to do?

Value of work dissection and analysis


Without full time records on work you will not be able to arrive at the right price

on similar matters in the future when asked to quote

on matters in hand


Under recording of time


Leakage?

Do you know how much time, which should be recorded, you are losing each year?


You have [ ] fee earners Each records and recovers an additional 15

minutes per day

How much more revenue will you generatein a full year?

If…


Under recovery (realisation) of time


If you under record time you are pre-judging the decision as to what is the right price for the job.

- Whose decision?- How much time did you write off last year?- How accurate is your recovery (realisation) rate?


Health warning - beware slavishly applying recorded time

Time is an important factor but one of only a number of factors to be taken into account in arriving at the right price for the job.

Others?

See Law Society Practice Notes


Time is an important management tool


1. If you cannot measure it, you cannot manage it


If you do not fully record time you will not be able to accurately measure it and manage it

- accurate financial analysis will not be possible- decisions made on inaccurate analysis will be flawed


2. Fully recording time is also important for managing …

client expectations Regulatory compliance – Rule 2 Risk management


3.Management of workloads / recruitment decisions

- who is busy?

- who is not so busy?

- do we need more / less people?


4. Are we working profitably?

How do we know we are profitable if we do not know how much our work is costing the firm to do?


5. How to budget for revenue

As a starting point:

Fee earners XCharge out rates XHours


6. Are we ‘on budget’?

Fully recording time enables us to - compare performance with budget

throughout the year- Identify trends

Who measures ‘input’?


Why is time not fully recorded?


I was told not to record time on the matter!


‘Because I am not worth it!’


‘The job will not justify all my time!’


‘I cannot be seen to have big write – offs’


I don’t have enough time to record!


I don’t have enough time to time record!


I can’t remember what I did during the day!


Time is not relevant to our business


Recording time is relevant to EVERY part of a law firm’s business


How to set and monitor time targets to achieve financial results


As a starting point, look at …

Utilisation = time recorded as a % of standard working hours (220 days x 7 hours = 1540)


Monitoring and reporting of time

Frequency? Actions?


Non matter related time?

Why is it measured? If information is not used then why

measure it? Decide whose roles requires non matter

related time to be measured


Any questions?

Why is time recording so important? Peter Scott Peter Scott Consulting .

Documents

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peter scott consulting

peter scott consulting

recording of time slide

recorded time time

pricing slide

profitability slide

analysis slide