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    This blog is sponsored by Smart Time Apps. Our flagship product, Smart Time, is an all-in-one time management platform for attorneys, accountants and consultants. The Smart Time on-demand time capture and time entry application enables firms to effectively collect, track and recoup billable time, thereby increasing revenue and profitability. Our mobile apps enable you to do timekeeping anywhere, anytime.

    In this blog we will share our thoughts on timekeeping, industry best practices and how technology can help improve the process.

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Smart Time Case Study: Fowler White Burnett

One-on-One with David Maloyed, Accounting Database Manager

An end to reconstruction, time leakage and the search for the “holy grail” of more billable hours – that’s what David Maloyed, Accounting Database Manager at Fowler White Burnett, was looking for in a time capture solution for his firm. Recently, we talked to David to discover his reasons for implementing Smart Time.

What were the business drivers for implementing a time capture solution?

We used Smart Time at my last firm. When I joined Fowler, I made the pitch to management that time capture software would reduce busy work, increase accuracy, and, the “holy grail,” find more billable time. The ability for a software product to create additional billable fees – now that’s something you don’t find in many products.

What I discovered at my last firm — and it is true here as well – that attorneys, by their very nature, tend to prepare their timesheets by reconstructing their day by looking at their e-mails, calendared appointments and phone logs. On average, a partner-level attorney spends 2-4 hours a week on the reconstruction process. With Smart Time, they get a report every morning listing what they did the prior day. They don’t have to reconstruct — it’s all right there for them.

Besides saving time, Smart Time cleans up the timekeeping process and shuts down time leakage. Time capture reports jog the timekeeper’s memory to make sure they book all of their hours. The simple act of closing the leak increases hours. That’s how time capture works.

We took one of our problem people and figured out if she billed five more hours per month, it would pay for the product for the whole firm. It was kind of like, “Where do we sign and how soon can we get it installed?” It was a no-brainer.

How did you go about selecting a vendor?

Besides Smart Time, I looked at three other time capture products and either they were outrageously priced (six figures to get my foot in the door, which is absurd) or the attorneys didn’t like the user interface. I can tell you from experience, if the attorney doesn’t like the interface, it doesn’t matter how good the software is, they’re not going to use it. Smart Time scored highest on usability.

How did the implementation go?

From a technical standpoint, implementation went really smoothly. We had everything resolved in about 10 days. E-mails and appointments are mined from our Microsoft Exchange system. Rather than grab phone calls from our switch we went directly to our nQueue Billback cost recovery system, which gives us inbound and outbound calls. Mobile calls are secured from our Blackberry Enterprise Server. We had some technical challenges with documents, but Smart WebParts found a way to make it work.

How did you deploy Smart Time?

We did a Lunch ‘n Learn introduction for our early adopters on a Thursday. I started checking in with them the following Monday to see if they had any questions. By Friday, all 15 were up and running. So, we got everybody in the first group trained and live in one week, which is saying a lot.  For the rest of the firm we are installing the product virally. We are leaving it up to our first users to do the PR push for us. Our first users are very excited and have been spreading the word to their colleagues. Attorneys are contacting me and saying, “We want to be in the next round, when’s it going to be, do we have to wait?”  Everybody agrees we should have done this sooner.

What feature do the attorneys love best?

Besides eliminating the manual reconstruction process, the attorneys love the block feature. It is part of the learning system that allows users to associate e-mails, phone numbers and such to a client and matter. The block feature allows users to permanently hide numbers, like phone numbers from their spouse or kids’ cell numbers, so that they don’t come up every day in their report. They know they’re not going to bill it, so by blocking it one time, it never shows up again and reduces what they’ve got to look at on a daily basis when they prepare their timesheets. That’s the “smart” in Smart Time. It learns, and the more you teach the system, the better it works for you.

What’s it like working with Smart WebParts?

I can call them and say, listen, this isn’t working for us, what about X? And they say, “We can probably do that.” With most vendors, “We can probably do that” means they’ll put it on the board and in six months maybe they’ll talk about it. But with these guys, I get updates in 30 days.  You just don’t get that from other vendors. The level of service is beyond reproach.

How have your attorneys adapted to the system?

With Smart Time’s straightforward interface, the attorneys quickly adapted to the system. It was a 15-minute training session and they were off to the races. We barely get a support call. The product is solid. Attorneys are reporting back to us that it is taking them less time to prepare their timesheets and they are finding more time to book. Everybody is happy.

Alternative Fee Agreements: Does This Mean the Death of Timekeeping?

By Todd Gerstein
CEO & Founder, Smart WebParts

If your firm is implementing alternative fee agreements, does it mean your attorneys can stop keeping time? At first, it is an intoxicating thought:  No more timekeeping.  A get-out-of-jail-free card. Attorneys don’t agree about much, but the one thing they do agree upon is that they all hate timekeeping.

I concede the point that you don’t need the recorded hour for billing AFAs. But what about the other uses of the recorded hour? How are you going to measure the profitability of the engagement?  What about attorney evaluation? Even with an AFA, does the client still have the right to request an hour’s report? To get some answers, I talked with two leading management consultants in the legal industry.

Getting the Experts’ Perspective 

The first expert I talked to is Jerry Kowalski, J.D., a nationally recognized consultant and adviser to law firms, who advises law firms on a variety of matters, including strategic planning, trends in the profession, compensation, alternative fee agreements and mergers.  His latest book is Navigating the Perfect Storm:  Recruiting, Training, and Retaining Lawyers in the Coming Decade; Lessons Learned and New Opportunities Exploited.

I also spoke with Ed Poll, J.D., M.B.A., CMC. In addition to his consulting role, Ed is  a nationally recognized coach and author who has consulted to law firms in the areas of strategic planning, profitability analysis, and practice development for over 20 years. His latest book is Growing Your Law Practice in Tough Times.

Question from Todd Gerstein: Is it essential to track time in an AFA?

Jerry Kowalski:  Tracking lawyers’ time in AFAs is essential. It provides a number of vital tools. First, it provides legal project managers with a tool to measure timeliness and compliance with the project’s timeline.

Second, it provides law firm management with a means by which to measure productivity, in connection with (a) any particular matter, (b) identifying individual lawyer’s demonstrated efficiency when assembling a team for a subsequent matter, and (c) annual associate and partner reviews.

Third, astute and well-informed clients frequently require its law firms to provide real-time access to the firm’s time accounting system and monitoring the time provides a method for the client to check on both efficiency and timely compliance with the timeline presumably incorporated within the terms of the scope of the engagement agreement.

The well-managed AFA engagement also should require regular discussions between client and the firm’s client relations manager regarding the progress of the matter. Maintenance of accurately reported timekeeping provides client and law firm to have well-informed discussions on the progress of the matter.  

It certainly hasn’t escaped me that the irony is that in the former model of hourly billing, lawyers were incentivized to keep their pedals to the metal and bill large amounts of time. In the new AFA paradigm, lawyers will be incentivized to go light on the pedal to demonstrate efficiency.

Q:  How do you measure the profitability of an engagement without knowing what was spent on production?

Jerry Kowalski: Tracking of time in AFAs should also require some radical re-thinking by law firms of the metrics used for measurements of profitability. In the hourly billing model, profitability was measured by an equation under which time recorded was multiplied by a firm’s standard hourly rates, less write-downs and write-offs (or in some instances, plus a premium added to a bill), yielding a realization rate.

The fact is that under generally accepted accounting principles, as well as under the practice in virtually all industries, this metric does not provide an accurate measurement of profitability. AFAs permit law firms to measure profitability of an engagement using more conventional metrics: That is, the calculation of the actual cost of labor, namely the compensation of the timekeeper, together with an allocated portion of G&A, measured against the fee received. Nonetheless, recording of time is still of the essence of both an AFA and a conventional hourly billing model.

Q:  But what about measuring lawyer productivity? If you abandon timekeeping, you need to come up with some other criteria by which to measure attorney productivity. Till now, the booked hour has been a major evaluation metric. Without the hours metric, associate evaluation could seem utterly subjective.

Ed Poll: There is nothing wrong with subjective evaluation, except that most young people do not trust the evaluation of them by the older generation. There is always perceived a subjective bias.

You also degenerate into the ability to test lawyer productivity by reference to hours. Hours by themselves do not mean productive. Coming up with the correct solution is the objective and taking five minutes to do so instead of three hours doesn’t mean you’re less productive; on the contrary, you’re more effective. A further element of productivity is technology … one lawyer uses the right technology and a second lawyer may not use technology at all, inputting many hours of personal time … does that make him more productive?

Q:  Even with an AFA, do clients still have the right to ask for an hour’s accounting?

Jerry Kowalski: The question as to whether a client who does not require access to time records in connection with an AFA engagement should still be entitled to review time records is not susceptible to an easy answer. Certainly, the law firm might take the view that time actually expended in the engagement should be a matter of indifference to the client.

However, a client may make the request, or perhaps should even require, disclosure of these records so that it is afforded the opportunity to have some measure of the firm’s actual costs and profits (realizing that the client would be unaware of the actual cost of labor and G&A) in order to negotiate the next AFA on a more informed basis, compare efficiency with other providers of legal services and provide its input as to the selection of professional personnel in subsequent AFA engagements based on a particular lawyer’s proven efficiency. Law firms’ responses to such requests, in the absence of a prior agreement on the subject, will be driven by issues of maintenance of quality client relationships.

Ed Poll: That depends on the rules of professional conduct and on the terms of the engagement agreement.  Generally, I would say “yes,” but not necessarily without reference to the RPC and agreement contract

One thing you didn’t raise, however, that I believe to be important:  The current rules of professional conduct require that a fee be reasonable (not unconscionable in CA); the first element among a series of factors for the disciplinary board or trier of fact is always hours spent. Thus, even in an AFA environment, I think the rules of professional conduct are going to require actual timekeeping, at least in the near term.

Wrapping it Up

After my conversations with Ed and Jerry, I am convinced that time will remain an invaluable metric in the law firm. It can settle questions of productivity, efficiency, profitability and competitiveness. In fact, the biggest reason lawyers and firms hope that AFAs do away with timekeeping is because it is so painful. Take away the pain (hint: technology) and suddenly tracked hours seem like information no firm would want to be without, even if it’s only used internally. So, regardless of how a firm bills, it seems to me that it is premature to predict the death of attorney timekeeping.

Ed Poll from LawBiz Blog Interviews Todd Gerstein on Leaked Time

Todd Gerstein is President of Smart WebParts. He talks about “time leaks” experienced by lawyers. His new product is called “Smart Time.” It’s designed to assist lawyers in capturing time they expended but failed to record. Studies have shown that time is “leaked,” lost or never recorded, to the tune of at least 100 hours per year. At $200 per hour, this is $20,000 in revenue per year that was never billed — and thus lost; simply because of careless lawyer behavior.

Click Here to Download the MP3

SWP Expert Series on Law Firm Timekeeping

First Online Audio Program Features Distinguished Legal IT Leaders Jo Haraf, Michael Kraft and David Gallagher

Click Here to Downloaad the MP3

Los Gatos, California – January 27, 2010 – Smart WebParts (www.smart-webparts.com) has announced the Smart WebParts Expert Series on Law Firm Timekeeping, a new audio educational program that will be delivered online.  Each 30-minute webinar in the series will feature distinguished legal technology industry experts that come together to discuss challenges and solutions to improve law firm timekeeping practices and profitability.

Now available on the Smart WebParts site at www.smart-webparts.com/expert.html, the series’ first installment examines the state of timekeeping in law firms from the user, economic and technology perspectives.  Ever since the billable hour became the key metric for billing, lawyers and their firms have grappled with the reality that a great deal of billable time goes unbooked, for a variety of reasons ranging from human behavior to technology limitations.  This unbilled time adds up and the firm inevitably leaves many hours and dollars on the table. 

The inaugural episode features three industry experts, Jo Haraf of San Francisco’s Haraf Professional Services (www.harafconsulting.com) and contributing author of Achieving Excellence in Legal Technology Management (West, 2009), Michael Kraft of New York City’s leading IT consulting firm, Kraft Kennedy (www.kraftkennedy.com) and from London, David Gallagher of Saturn27 (www.saturn27.com), one of the foremost providers of legal technology solutions in the U.K. and Europe.  Each of these experts weighs in on reasons behind ineffective timekeeping and offers potential solutions to this longstanding issue.  In addition, the webinar touches upon the direct economic impact that accompanies timekeeping in a profession where time is literally money. 

Todd Gerstein, CEO of Smart WebParts, remarks, “Smart WebParts developed this new expert series to educate the market about the importance of complete and accurate timekeeping, and to provide constructive ideas to help them reduce leaked or lost time.  By using the right timekeeping technology, even the most effective timekeeping lawyers can reclaim 1-4 additional billable hours a month.  That time really adds up to affect a law firm’s revenue.  This educational series will help any lawyer, managing partner, CFO or IT director to better understand what they can do to improve timekeeping to positively impact their firm’s bottom line.”

In September 2009, Smart WebParts launched Smart Time, a time capture and entry software product that helps timekeeping professionals such as lawyers, accountants and consultants construct complete and accurate timesheets.  By polling across servers (Exchange, BES, DMS) and phone switches (VoIP and legacy), Smart Time provides timekeepers with a detailed journal of their daily work activities, enabling them to prepare complete and accurate timesheets. Since Smart Time finds missed or leaked time that may not otherwise get billed, it stands to increase a firm’s billable hours and ultimately its profitability. A return on investment for the software can be recouped in weeks if not days.

Ari Kaplan from Law.com Legal Technology Blog Interviews Todd Gerstein

Click Here to Listen