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Time Capture – How Do You Measure Leaked Time?

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Todd Gerstein
CEO & Founder, Smart WebParts

Around here, we talk a lot about the concept of leaked time. We believe it to be the most common way that firms lose revenue, and the easiest problem to fix. Let’s take a closer look at why we’re confident that leaked time is a huge issue for almost every firm.

Q: How do you know leaked time is real? How can you measure something that is missing?

A: Our contention is that leaked time manifests itself in small increments. It could be the timekeeper forgetting to book an email, phone call, mobile call, or a quick edit to a document.

We have three methods to measure what’s missing. The first is anecdotal, based on the stories we get about new experiences after Smart Time is implemented. For example, a CFO recently wrote to us to say, “I just heard back from the managing partner in our Florida office. He found $4100 of leaked time in August. I am speechless.”

The second method is a forensic look back at old timesheets. For example, we’ll have a user pull out some old timesheets that were done before adopting time capture. Then we’ll have them reconcile the daily Smart Time journal report against their actual timesheets to see if they can find time they forgot to book. Inevitably the user always finds leaked time.

The third method is an analytical look into a firm’s accounting database. This is part of something we call our Timekeeper Behavior Analysis.

Q: What is the Timekeeper Behavior Analysis?

A: We created the TBA to help law firms better understand their timekeeping process. At its core are a set of key performance indicators and metrics that measure timekeeper behavior, time entry velocity (how fast time gets logged into the system), the value of late time, and the value of leaked time (time worked but not booked). The TBA is available for firms with Aderant, Elite and the other major accounting systems used in the legal industry.

Q: What kind of data does the TBA examine?

A: Let’s say the ABC Sample Law Firm is a U.S. law firm with 350 timekeepers. In this study, we extracted 12 months of data – equivalent to 780,000 time tickets — from the firm’s accounting system. That’s a little more than 8 time tickets per person per day. After we extracted the data, we loaded it into our system for analysis.

Next, we calculated velocity for every timekeeper (i.e., how fast does the timekeeper get their time into the system?) First, we calculate velocity for every time ticket and then we average the results. Velocity is equal to the post date minus the work date.

So a person with a velocity score of zero does their timesheets daily – what we call a “contemporaneous” timekeeper. Do your timesheets once a week and you have a score of 3.5, or once a month and your score is 15. These are examples of a “reconstructionist” timekeeper.

Q:  Do you look at any other data?

A: The next thing we do is to look at the mix of time increments across different entries. So, what percent of the time entries are .10, .20, and so forth?

If everyone had perfect memory, everyone should have the same mix of time increments in the actual time entries. That scenario would represent no leaked time.

Q: But what results do you see?

A: We contend that a timekeeper with a velocity score of zero will have more small time entries than someone who has a higher score. In other words, the longer you delay reporting time, the more apt you are to forget these small increments of work.

In this chart, we are cross-tabbing time entry velocity to time increments. For timekeepers with zero velocity, 60% of their entries are small increments. Notice the immediate drop-off when velocity goes from 0 to 1.

Waiting to record time by even one day shows a significant drop-off in small entries from 60% to 45%. To us, this is the marker that proves leaked time exists. Go out to a velocity score of 7 (timesheets done every two weeks), and you see small increments drop to 38%.

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Q:  Where do all these small increment time entries go?

A: Some of it might not be leaked, but instead included in bigger entries for attorneys who do block billing. But it’s more likely that the time is forgotten and never booked.

We believe this data, and the markers it creates, confirms our analysis.