Time Recording for Dummies!
It’s a well known fact that attorneys, auditors, accountants, consultants and other professional hate recording their time. That is a universal rule, which goes along the lines of “this isn’t what I went to law school for……”
The fact is, a lot of professional services firms, from top shelf global law firms to regional players, and even boutique shops, lose significant revenues and profits during the process of accurately recording time.
A recent study shows that the end to end process of time recording, data capture, invoice creation, editing, submittal and accounts receivable process, costs firm 6-11% in lost revenues. That figure represents gross revenues... to put it another way, if your firm is making 25% gross margin, its time recording and invoice receivables is costing it 32% in lost profits, based 8% lost gross revenues. See below:
|Cost of Operations:||750,000|
Loss via time recording, billing and receivables process:
|Mean Avg:||8% (6-11%)|
|$1,000,000 – 8%:||80,000|
|Loss in Revenue:||80,000|
|Lost Profit Margin:||32%|
While this is a generalized example, you will see that it paints a very stark picture for the managing/revenue partner, or CFO of the firm. Bear with us, because flipped on its head, this problem represents a large revenue opportunity.
Root Cause of the Time Recording Problem:
To use a good analogy here, I’ll share a story about the sea. The sea is supported by water flows from rivers and estuaries, which all, respectively, flow from the land.
If we think about water from the rivers as time recording data, then the sea is where all of these relatively unfiltered invoices end up. In this downstream environment, vendors fight to help clients contain and cut costs, by finding faults in these invoices. That means lost revenues for whoever is on the other side of that process.
To be clear, there is any entire industry behind helping clients slash the bills of their law firms, auditors, accountants and other third party professionals.
Keeping with the river/sea analogy, these types of vendors are focused downstream, on what happens in the sea. They retrospectively try and fix problems created by imperfect invoices coming from the many third party professionals upstream.
The source of all invoicing data is the riverhead in this analogy. The riverhead is where time is recorded and stored prior to invoice creation and submission to the client. With time pressures, clunky technology, bad habits, cultural indifferences and lack of management, oversight and control, the quality of time records at this riverhead is the single most common cause of reduced profitability of the firm. No question.
Cleaning up the River
At LSG Law Firm Services, we focus on ensuring that time recording is made simple, intuitive, and in all cases, profitable. We play at the riverhead, not in the sea.
We use machine learning, AI and natural language processing, to convert voice/speech into text and data. We combine this technology with matter or file and timekeeper/fee earner data to enable faster, user friendlier and more profitable billing.
Without a wholesale replacement of the firm’s existing matter management and accounts payable system, our Bilr applications can integrate and connect to the firm’s IT backbone.
What’s in it for the Firm/Client? Improve Time Tracking, Increase Revenue
Long story short, time and money. Elaborating a bit, the upside is an increase in revenue and profits, and more time frees up for case work, further driving revenues.
Machine Learning/AI and Natural Language Processing: The Future Of Time Recording
LSG envisions a day in the next 18 months or less, where time recording will be autonomous or semi-autonomous, once the learning is sufficiently deep and the AI understands the patterns it can mimic. Along with the appropriate ethical and fiduciary controls in place, time recording and invoice submission, and accounts receivable will require few timekeeper and admin hours being burned and will drive greater profitability for the firm.
LSG: Raising the Revenue Bar
Gary R Markham is a 20+ year veteran of the e-billing, time recording and legal practice management technology (LegalTech) space, and is quoted on Forbes, RIMS, ACC and other platforms. He often speaks and advises clients on managing the finances of their practice, enabling them to focus on the job at hand.