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How lawyers can get the most out of their time

Noel Peel

Written by

Noel Peel


June 3, 2021

Where does the time go? 

The phenomenon that we perceive that time is passing more quickly as we age is well-documented. Theories for why this feeling is so common abound, from slower release of dopamine as we age, to the fact that we add fewer new experiences as we age. What is for sure, at least in the case of time as a commodity produced and sold by law firms, is that time unrecorded passes into the ether very quickly. 

Thinking about time as a commodity, as a manager, you certainly know the cost of your raw materials, such as labor, rent, technology, and insurance.

Now, how efficiently are you using the raw materials you have so carefully assembled? Calculate your utilization and realization rates, for starters. First, track all the time a timekeeper spends, not just billable time. Then, divide that total time by the number of hours billed. This will be a number less than one and, expressed as a percentage, is your utilization rate. 

Some surveys of law firms suggest a typical utilization rate of law firms is only around 33%, i.e., producing three to four billable hours per full day of work. Of those hours produced, surveys show that about 80% are invoiced, and collections are 85% of invoiced amounts. Multiplying these three key inputs provides the sobering result that “average” attorneys are generating revenue only about 22% of the time they spend working.

You don’t have to be a math wiz to see that the greatest opportunity to improve the bottom line in this example is to increase the average 33% utilization rate. How to do that?

Procrastination/delay in entering time is the single greatest source of unbilled hours. Ann Guinn, writing for the American Bar Association GPSolo Magazine, estimates that a timekeeper who waits until the end of the day to enter time loses 10% of their time; wait another day, and 25% has vanished; waiting a week or more can cost a 50% loss. Here are a few tips on how to avoid that. 

  • Determine your firm’s, and each user’s, utilization and realization rates. This can be done manually, but not very easily or very well.  Using a cloud-based law firm management software, such as Smokeball, you can set uniform standards and time-entry codes while tracking everyone’s time in a contemporaneous, consistent, and continuous manner. 
  • Analyze the non-billable time, looking for patterns of inefficiencies and common time wasters, such as particularly “needy” clients, firm processes that are adding non-billable time to the user’s day, and timekeepers that need better direction in their daily activities.
  • Consider reallocating your annual bonus program, perhaps dividing it into quarterly awards based on achievement of utilization improvement goals during the year.

It is certainly possible to keep time manually, as has been done by generations of attorneys. For those who don’t want to waste (unbillable) time calculating, and often recreating, their hours, proven, accessible, and affordable solutions are available. Smokeball’s practice management software offers automatic time tracking, among its many features. Automatic time tracking monitors all the time users spend on a file and breaks it down into billable entries, like writing an email or drafting a document. If billing hourly, these time entries can be sent straight to Smokeball’s legal billing software for fast and easy invoicing. The efficient and timely recording of activity on each file will provide an instant boost to each user’s utilization rate.

If you have resolved to become more efficient, more profitable, and less stressed in the coming year, contact us today for a customized complementary demonstration.

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