Every day I speak with boutique firm lawyers about their practices in my capacity as Attorney Director of Priori, the legal marketplace connecting in-house teams with vetted outside counsel. One consistent–and dismaying–theme is that they are working around the clock but not hitting their financial goals. This catch-22 is borne out in the statistics. According to the 2018 Clio Legal Trends Report, small lawyers, on average, perform only 2.4 hours of billable work per day, bills for 1.9 of those hours and collects 1.6. The 2018 Above the Law and Clio Solo and Small Firm Compensation Report (“Solo and Small Firm Compensation”) says that 42% of small law firm lawyers earn between $50,000 to $100,000.
This leads to an inescapable conclusion: lawyers need to spend more of their time on revenue-generating tasks.
So where is the rest of their time going? From my conversations, it appears that the majority of a lawyer’s day is spent in three main areas. The first is billing and financials. This includes recording billable hours, processing payments and chasing clients for overdue invoices. Over half of lawyers claim they frequently chase late payments. Whilst it may be difficult to control the variables of client behavior, many small law firms and solo practitioners are operating without time recording and dedicated invoicing tools, making billing a manual and time-intensive task.
Marketing and business development makes up the second chunk of time. Lawyers, especially solo practitioners and smaller firms, are spending an increasing amount of their energy selling their value proposition to potential customers. With over 1.3 million lawyers, the U.S. is an incredibly competitive legal market. This means that attorneys need to spend more and more time outlining their value, as well as differentiating themselves from their competitors. Examples of such behavior include networking, managing a website and broader online presence (some attorneys have even begun to create Youtube channels), and potentially paying for advertising. Many of the attorneys I speak with say that their efforts are often time intensive and do not produce the desired outcome, but they feel they must engage in these activities to attract business and stay relevant.
The final bucket is firm organization and administration, which comprises managing and hiring staff, organizing firm information and general office logistics. For many of the solo or small firm lawyers I speak with, full-time administrative support can be financially out of reach, but the technological alternatives are not always immediately apparent.
In my experience, lawyers are well aware that this is a problem. Indeed, in the Clio survey, increasing firm revenue (84 percent) and increasing the efficiency of firm operations (80 percent) were listed by lawyers as the two most important priorities in determining a firm’s future success. However, when it came to the most decisive revenue inputs — growing the client base and billing more hours — the response was relatively muted: only 34 percent of lawyer’s surveyed said growing a client base was important, and only 23 percent said billing more hours was important. This misalignment suggests that many lawyers already feel like their time is stretched and so law firms are not focused on the most significant metrics for achieving their business goals, namely getting more clients and billing more hours.
There are a couple of key lessons to be learned from all this non-billable time. First, lawyers need to find ways to streamline and minimize non-billable tasks and ought to look to technology to help this. For those looking to reduce the amount of time spent on business development, the lawyers I work with report that using technology tools like Priori significantly reduces the time burdens of securing good quality, consistent work from clients who pay on time. And for those lawyers with larger practices, many note that client relationship management systems ensure they don’t miss opportunities to follow up on a warm client leads and increase the number of client matters emanating from meetings. Each practice is, of course, different, but overall the lawyers I speak with have reported that integrating the cloud into their practice has been one of the most important tools for increasing their efficiency by allowing them to work “on the go” and respond more quickly to clients. As for more traditional administrative support, I increasingly hear from lawyers that using virtual assistants to direct calls, automated scheduling for meetings and outsourced flexible administrative support have been true game changers in their quest for efficiency.
These startling metrics should be a wake-up call for small firms. If a lawyer is only dedicating a small fraction of their day towards billable tasks, revenues do not reach their potential and profitability suffers. In my experience, attorneys that focus on the correct metrics and streamline and outsource non-billable tasks have seen their efficiency, revenues and profits all increase. It is, of course, difficult to find the time and money to research and employ new solutions, but the solutions are out there for lawyers who are open to taking a free trial or viewing a demo. For those who have an open mind and embrace technology, there is an enormous opportunity to reduce the overall number of hours they work, while increasing the billable ones and overall lawyer happiness!
Denver Sheridan is the Attorney Director of Priori and a graduate of The University of Cambridge.
