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Do all lawyers need to track their billable hours?

Noel Peel

Written by

Noel Peel


June 3, 2021

Across the legal industry, there’s one thing that all lawyers have in common – the need to invoice accurately and efficiently. Law firms help families plan for their future, victims of malpractice seek justice, and much more; but at the end of the day, each law firm is a business and needs to remain solvent. That’s why it’s so important that whether billing via flat fee, contingency, or hourly, billable hours are tracked and recorded accurately. Every bit of work that’s not accounted for has a real and immediate impact on your firm’s bottom line.

Time tracking for hourly billing

Hourly billing is common in practice areas like family law and ensures that no matter how long a case takes to resolve, the attorney will continue to be paid for their time. This creates extra security for the attorney but requires painstaking timekeeping in the firm’s case management system, and can be intimidating to clients who may start a case not knowing how much it will ultimately cost them.

Time is quite literally money in hourly billing. However, recording billable hours day is frequently the first task to be forgotten when things get busy. Harried attorneys then find themselves calculating their hours at the end of the week (or month), reviewing their calendar software and making their best guesses at exact billable hours spent on their matters.

When this happens, attorneys frequently underestimate the time spent on each case. They may recall an hour-long phone conversation but not the countless times they spent five or ten minutes reviewing emails or documents – and those minutes can add up quickly into lost hours and lost profits.

Time tracking for transactional and contingency billing

Most personal injury law firms bill on a contingency basis, meaning they don’t get paid until a case is resolved in their client’s favor, while transactional areas of law such as real estate tend towards flat fees. These billing models can simplify a firm’s invoices and give clients confidence that they won’t be charged higher legal fees than expected. Especially in times of financial uncertainty, it’s no surprise that clients may prefer the ease and predictability of a flat fee or contingency based plan.

This doesn’t, however, mean that transactional or contingency based firms can get away without tracking their time. It’s impossible to create a fair and profitable fee structure without solid data regarding your average time spent for type of case or transaction. Having a record of time spent in the past means you’re able to more accurately estimate how much time a case might take in the future and set your fees accordingly.

Time billing software

What’s the best way to accurately track time?

The most traditional approach is to use a stopwatch or clock to capture how much time a task takes, and then transfer that information to a physical or digital ledger. For more tech-savvy lawyers, some legal software or lawyer apps include internal stopwatches that can be started and stopped as necessary. These digital timers remove the need for physical timing equipment, but still require you to start and stop a timer every time you begin a new task. A single missed click can throw off your tracking for the entire day and send you back to estimating.

For those who don’t want to waste (unbillable) time calculating their billable hours, Smokeball’s practice management software offers automatic time tracking. This feature monitors everything users do in a matter and breaks it out into time entries like writing an email or drafting a document. This allows attorneys to review where they and their staff are spending their time, create reports, and see how profitable their business truly is. If billing hourly, these time entries can be sent straight to Smokeball’s legal billing software for fast and easy invoicing.

As the legal industry continues to evolve, the rise of remote work makes it more important than ever that attorneys meticulously keep track of how they use their time and where they might be losing money. Practice management software, legal billing software, and lawyer apps are fantastic tools, but ultimately are only as good as the data put into them – if you’ve been considering making improvements to your time billing strategy, don’t wait – the time is now.

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