Billable Hours, Small Law Firms

Small Firms, Big Lawyers: The Real Reason for Timesheets

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What did you do yesterday? I’m assuming you went to work. Did you put in a full day? Great. Let’s assume you got started around 9:00, took about an hour for lunch, and signed off at 7:00. Maybe for you that’s a light day, or maybe that’s a long day. Doesn’t matter. So that means you worked nine hours. OK.

Let’s further assume that you frittered away an hour, mostly spent reading Above the Law or wondering why they’re still playing hockey in the summertime (I’d make a Bruins reference here, but it would be strictly from the bandwagon). So that leaves eight hours of bona fide work. Eighty point-ones. Four hundred eighty minutes.

Now look over your timesheet from yesterday, and think about how you spent those 480 minutes. Were they all the same? Were they all of equal value to solving your clients’ problems?

Of course not. But if your minutes aren’t all the same, why are you counting them as being the same? What are the real reasons that lawyers track their time?

Toting up hours each day on a timesheet is a brute-force way of measuring your work. It’s a blunt instrument. It’s boiling down the value you’re providing your clients into a single number based on the passage of time and nothing else. It’s counting the bottles instead of tasting the wine. It’s counting the pixels instead of admiring the photo.

By treating every minute as having the same value (your hourly rate divided by 60), timesheets leave no room to account for the insights, judgment, knowledge, and experience that you bring to solving a legal problem. A minute that you spend logging into Westlaw is worth exactly the same as the minute you spend remembering a similar case you read about three years ago. A minute you spend telling a partner which folder the brief is filed in is worth exactly the same as the minute spent thinking up the perfect closing paragraph to the brief’s argument section. By treating these minutes the same, you’re mixing apples and oranges.

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Even worse, when all you’re measuring is ticks on the clock, you’re treating your clients’ problems as all being the same. I’ve had half a dozen cases in which I represented a startup company where the founders had noncompete agreements and the former employer was seeking a court order to shut the new company down. In those cases, the companies’ very existence depended upon the outcome of the case. Compare that work to drafting a bereavement-leave policy or a dress-code policy. Can it really be that each six-minute increment I spent working on those policies was worth the same as each point-one I spent saving those companies from judicial closure? The clients certainly don’t think so.

And for that matter, your timesheets treat every client as exactly the same as all your other clients. That might sound fair in the abstract, but it’s not the real world. We all have good clients and bad clients, big clients and small clients, richer clients and poorer clients, and happy clients and unhappy clients.

Imagine that you have an hour to work before you have to leave. Sitting on your desk are two case files. One is for a client who always bugs you, who is slow to pay, and who doesn’t really value or appreciate your work. The other is for your best client, who is a pleasure to work with, pays promptly, and recommends you and your firm to other potential clients. Whose file do you pick up? Of course you’d rather do the work for the better client. But on your timesheet, the point-ones will look absolutely identical.

So why do we use the timesheets?

Some people — mainly lawyers and accountants — will respond that it’s a way to measure the firm’s costs and apportion them appropriately. But that’s nonsense. Your pay isn’t going to change if you spend eight hours on a client letter instead of four hours. You work on salary, like most professionals. So the firm’s costs don’t change. Plus the firm doesn’t try to apportion all the other expenses of operation, like rent or insurance or utilities or secretaries or computers or coffee filters.

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Others will say it’s to make sure that we’re working efficiently. But that doesn’t make a lot of sense either. In a time-billing system, more hours equals more money. Most people who talk about being “efficient” mean spending less time, which equals less money. So how is that a good thing for the firm?

No, the main reason that professionals track their time on timesheets is because of a lack of trust between the firms and the clients. We have trained our clients to pay attention to our activity during the course of a day, when in truth, the clients couldn’t care less what we’re doing and how we’re doing it as long as we’re solving their problems. We send them bills with detailed time entries because they don’t trust us. They ask, “How did you spend your time?” because we’ve taught them that that’s all that matters. If we’re going to charge them by the hour, then they’re going to want to see how we’ve spent those hours.

The time, and precisely how we spent that time, only matter to clients because we insist on charging them for that. And since they can’t see for themselves how we’re spending that time, they want the details. In other words, they don’t trust us. We can’t tell them that the time is what matters, and then give them a bill for 20 hours with the description of “professional services rendered.” So instead we spell out our activities, as if that’s what the client really cared about.

And in a way, we don’t trust ourselves, either. We’re afraid to charge for our knowledge, which is where our value comes from. So we charge for our activity instead. And that means tracking our activity on timesheets, and treating everything we do for every matter and every client as exactly the same on a minute-for-minute basis.

But if we started pricing our knowledge instead of charging for our minutes, the clients would come to understand that the value comes from the solutions we provide instead of from the ticks of the clock. And the trust problem would go away, because the clients would stop caring about the activity, and just care about our solving their problems.

So when you fill out your timesheet today, remember that you’re doing it because your clients don’t trust you. And we only have ourselves to blame.

Jay runs Prefix, LLC, a firm that helps lawyers learn how to value and price legal services. Jay Shepherd also spent 13 years running the Boston management-side employment-law boutique Shepherd Law Group. He writes the ABA Blawg 100 honoree The Client Revolution, which focuses on reinventing the business of law, and Gruntled Employees, a workplace blog. Follow Jay on Twitter at @jayshep, or email him at js@shepherdlawgroup.com.

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