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Why is time recording so important?

Why is time recording so important?. Peter Scott Peter Scott Consulting www.peterscottconsult.co.uk. Terminology. Matter related time √ Not chargeable time X. “Recording time is not relevant to our business” A conveyancer. Recording time is relevant to EVERY part of a law firm’s

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Why is time recording so important?

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  1. Why is time recording so important? Peter Scott Peter Scott Consulting www.peterscottconsult.co.uk

  2. Terminology • Matter related time√ • Not chargeable timeX PETER SCOTT CONSULTING

  3. “Recording time is not relevant to our business”A conveyancer PETER SCOTT CONSULTING

  4. Recording time is relevant to EVERY part of a law firm’s business PETER SCOTT CONSULTING

  5. The importance of matter related time • A major profitability factor • An important management tool PETER SCOTT CONSULTING

  6. A major profitability factor PETER SCOTT CONSULTING

  7. Profit = difference between revenue and overheadsIf your overheads can be kept constant, then all additional revenue is profitBuilding revenue in a law firm is the key to improving profitability PETER SCOTT CONSULTING

  8. Building revenue - Beware The ‘Triple Whammies’ • Under pricing • Under recording of time • Under recovery of time They can seriously damage your profit. How can recording time help? PETER SCOTT CONSULTING

  9. Under Pricing PETER SCOTT CONSULTING

  10. How much will it cost me?- fixed price / estimate?- charge out rate? PETER SCOTT CONSULTING

  11. Are we pricing for profit? How do we know we are pricing our work for profit if we do not know how much our work is costing the firm to do? Value of work dissection and analysis PETER SCOTT CONSULTING

  12. Without full time records on work you will not be able to arrive at the right price • on similar matters in the future when asked to quote • on matters in hand PETER SCOTT CONSULTING

  13. Under recording of time PETER SCOTT CONSULTING

  14. Leakage? Do you know how much time, which should be recorded, you are losing each year? PETER SCOTT CONSULTING

  15. If… • You have [ ] fee earners • Each records and recovers an additional 15 minutesper day How much more revenue will you generate in a full year? PETER SCOTT CONSULTING

  16. Under recovery (realisation) of time PETER SCOTT CONSULTING

  17. If you under record time you are pre-judging the decision as to what is the right price for the job.- Whose decision?- How much time did you write off last year?- How accurate is your recovery (realisation) rate? PETER SCOTT CONSULTING

  18. Health warning - beware slavishly applying recorded time Time is an important factor but one of only a number of factors to be taken into account in arriving at the right price for the job. Others? See Law Society Practice Notes PETER SCOTT CONSULTING

  19. Time is an important management tool PETER SCOTT CONSULTING

  20. 1. If you cannot measure it, you cannot manage it PETER SCOTT CONSULTING

  21. If you do not fully record time you will not be able to accurately measure it and manage it- accurate financial analysis will not be possible- decisions made on inaccurate analysis will be flawed PETER SCOTT CONSULTING

  22. 2. Fully recording time is also important for managing … • client expectations • Regulatory compliance – Rule 2 • Risk management PETER SCOTT CONSULTING

  23. 3.Management of workloads / recruitment decisions- who is busy?- who is not so busy?- do we need more / less people? PETER SCOTT CONSULTING

  24. 4. Are we working profitably? How do we know we are profitable if we do not know how much our work is costing the firm to do? PETER SCOTT CONSULTING

  25. 5. How to budget for revenue As a starting point: Fee earners X Charge out rates X Hours PETER SCOTT CONSULTING

  26. 6. Are we ‘on budget’? Fully recording time enables us to • compare performance with budget throughout the year • Identify trends Who measures ‘input’? PETER SCOTT CONSULTING

  27. Why is time not fully recorded? PETER SCOTT CONSULTING

  28. I was told not to record time on the matter! PETER SCOTT CONSULTING

  29. ‘Because I am not worth it!’ PETER SCOTT CONSULTING

  30. ‘The job will not justify all my time!’ PETER SCOTT CONSULTING

  31. ‘I cannot be seen to have big write – offs’ PETER SCOTT CONSULTING

  32. I don’t have enough time to record! PETER SCOTT CONSULTING

  33. I don’t have enough time to time record! PETER SCOTT CONSULTING

  34. I can’t remember what I did during the day! PETER SCOTT CONSULTING

  35. Time is not relevant to our business PETER SCOTT CONSULTING

  36. Recording time is relevant to EVERY part of a law firm’s business PETER SCOTT CONSULTING

  37. How to set and monitor time targets to achieve financial results PETER SCOTT CONSULTING

  38. As a starting point, look at …Utilisation = time recorded as a % of standard working hours (220 days x 7 hours = 1540) PETER SCOTT CONSULTING

  39. Monitoring and reporting of time • Frequency? • Actions? PETER SCOTT CONSULTING

  40. Non matter related time? • Why is it measured? • If information is not used then why measure it? • Decide whose roles requires non matter related time to be measured PETER SCOTT CONSULTING

  41. Any questions? PETER SCOTT CONSULTING

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