Andrew McDermott

The headcount at 400 of the largest law firms in the U.S. has grown between 1 and 2 percent per year. Revenue growth in 2016 was also modest, 1.2, and 4.3 percent.

And then there are virtual law firms.

Virtual law firms shun the large, traditional office environment, preferring the home office, remote work, and cloud-based technology. Headcount growth for virtual law firms typically hovers between 15 and 30 percent per year;  revenue growth is listed at 50 percent or more.

Why virtual law firms outperform traditional firms

Traditional firms are struggling to grow.

Traditional firms are fighting for an ever-shrinking piece of the paying client pie. Chris Batz, a recruiter at The Lion Group, discussed the elephant in the room. “The first-adopter skepticism has shifted, and the business model has been proven,” Batz said. “People shrugged their shoulders a decade ago and thought it was a joke. Over 10 years later, it’s become a very compelling option.”

It makes sense then that employees are abandoning the traditional for the virtual. There’s more freedom, growth, and opportunity with virtual law firms.

Take a look at the growth rates of four virtual law firms.

Traditional law firm growth rates, if they’re growing, are nowhere close to these numbers. Why are virtual firms so appealing to so many?

• Clients love virtual law firms because they can get a much better team (and representation) for a lot less money. A partner at traditional BigLaw may bill at $900 an hour, but $550 an hour at a virtual firm.
• Attorneys love virtual law firms because they keep 70 to 80 percent of the business they bring in, compared to the 30 to 40 percent they’d be lucky to receive at a traditional firm. This is reminiscent of the eat-what-you-kill compensation model.
• Shareholders love virtual firms because of the huge financial upside — increased cash flow, revenue, and profit, distributed in a way that’s more satisfying to shareholders and partners.

These are just the broad strokes.

The benefits for virtual firms far outweigh the downsides; it’s something the legal industry has begun to pay attention to. What’s not clear is how you go about establishing a virtual law firm, especially one that’s capable of outperforming traditional law firms on a routine basis.

What virtual law firms need to outperform

The structures you need to build a successful virtual law firm are the very same ingredients you need to build a successful traditional firm. They’re fundamental components every organization needs to grow successfully. Here are the essential elements you need to build a successful legal practice.

1. Financial management. Cash flow is to a business what blood is to your body. This is the foundation of your virtual law firm. If you don’t have a clear set of guidelines to govern cash flow, you won’t be able to keep cash flowing into your firm.
2. Communications management. Poor communication = a cash-poor legal practice. Communications management covers internal and external communication — sales, marketing, business development, origination, etc.
3. Systems management. This refers to the rule sets that maintain standards and performance. It shows employees (who aren’t knowledgeable veterans) how to produce the results you need and how to sustain firm-wide quality standards you’ve set.
4. Legal management. This is your area of expertise. From a firm management standpoint, legal management is all about managing risk.
5. Service management. The part of your business your clients pay you for. It’s an important part of a healthy law firm; it’s also the client-facing portion of your organization. That said, it’s also the least important part of your firm. If your service is amazing, but you have poor cash flow management, for example, long term survival is unlikely.

How is this helpful?

If you’re using the same ingredients, how can you outperform traditional law firms? You can apply these fundamentals.

• Virtual law firms: Applying these fundamentals is easier, but it comes with more risk. If employees aren’t tracking their time appropriately, for example, it’s more devastating to your firm.
• Traditional law firms: Applying these fundamentals is more difficult but comes with less risk. Why less risk? A failure to perform is immediately apparent; consistent mistakes are more visible.

Most law firms don’t have these fundamentals in place. Here’s a list of comprehensive guides, covering a variety of topics you’ll need to establish these fundamentals your virtual law firm.

• Establishing your law firm (read this first)
• Essential tools to launch your virtual law firm (watch this second)
• Starting your own law firm straight out of law school

Financial management

• Anatomy of an Invoice: Best Practices for Client Billing in the Legal Industry
• 4 Strategies To Avoid and Prevent a Billing Dispute
• Compile Invoices and Shepherd Them Through an eBilling System
• 3 Blind Spots that Hurt Your Firm’s Realization Metrics
• The Optimized Law Firm’s Guide to Realization
• Billing mistakes that cost attorneys 50% of their revenue
• Billing and Time Tracking Best Practices for General Litigation Law Firms
• How to Increase Billable Time (and Revenues) for Accountants
• Getting Paid What You’re Worth: Why Time Tracking is Essential to Understanding Your Productivity
• How Excel Costs You Time and Money

Communications management

• How to generate a never-ending supply of clients with the Local SEO traffic pump
• Local search for lawyers: How online visibility leads to clients
• Understand the difference between reputation and review management
• Your Guide To Earning State Bar Referrals
• 2 Ethical Ways Attorneys Can Maximize Their Use of Facebook
• The Ultimate Guide to Law Firm Origination Credit Plans
• 10 Policies For Formulating an Effective Origination Plan
• 37+ Places For Lawyers to Get Published That Bring Value to Your Firm
• What Should You Include On Your Law Firm’s Website?

Systems management

• Why your law firm needs legal workflows for long term survival
• How to avoid feeling like you’re only productive on nights and weekends
• The Ultimate Guide to Automation for Lawyers
• The overworked attorney’s guide to legal practice management automation
• 4 Unexpected tasks lawyers can automate
• How attorneys and law firms can 2x their productivity (with 50% less effort)
• The ultimate guide to using virtual assistants at your law firm
• 3 Benefits and 3 Drawbacks to Hiring a Virtual Assistant
• 5 Tasks to Outsource to a Virtual Assistant

Each of these guides provides you with the data you need to build a strong virtual law firm. Why no details on the legal and service areas of lawyering? It’s your area of expertise, the part of your firm you can manage.

It’s an area you’re probably already equipped to handle.

If you have these ingredients in place, you’re ready to talk about the firm power-ups every firm needs, but most firms don’t have.

Power-up #1: What virtual firms need to beat traditionalists

Some firms have it. A hidden aura about them that seems to attract client attention effortlessly; it’s as if clients are automatically drawn to their presence. As if these firms can do no wrong.

What is that? That, my friend, is your value proposition. With the right ingredients, your firm can produce that same hidden quality other firms dream about.

But, only if you’re willing to pay the price.

What exactly is a “value proposition?”

A value proposition is a communication tool, a unique (one of a kind) promise to clients.

It can be implicit or explicit. It’s that one, specific, measurable thing that sets your law firm apart. It’s a persuasive, results-driven argument that gives clients a compelling reason to work exclusively with your firm.

It’s intimidating. A strong value proposition is carefully crafted and very compelling. It’s comprised of four specific elements.

1. Appeal. This is something I really want
2. Exclusivity. I can’t get this from anyone else, anywhere
3. Credibility. I believe your claims
4. Clarity. I understand your claim

Most law firms, when asked, provide clients with a generic set of answers. Most of the time, these answers fail at least one of these four criteria. Ask attorneys the question: “what makes you unique?” Almost inevitably, you get generic answers across the board.

You’ll receive answers like:

• We have some of the best attorneys around
• We work really hard
• We value our clients
• We care about our clients
• We’ll handle your case from start to finish

These answers don’t convey value; they conceal value. They’re the generic details clients are quick to speed past. Why does a strong value proposition matter?

It’s a differentiator. It’s a way for clients to quickly (and neatly) assess your firm. To filter and sort through the hundreds or thousands of firms competing for their attention and their dollars. Your value proposition gives clients the ability to answer fundamental questions about your firm.

1. Who are you?
2. What can you do for me?
3. Why should I trust you?
4. Have you served anyone like me?

True uniqueness, in the form of a strong value proposition, shapes client perceptions. It generates the spark they need to take a chance with your firm. Once they’re in, your performance generates the trust and faith they need to continue working with you.

Which is an obvious benefit, right? But there’s another good reason to create a strong and compelling value proposition.

Your moat.

Warren Buffett, legendary investor, coined the term “economic moat.”  He defines an economic moat as the competitive advantage one firm has over their competitors. An economic moat accomplishes two things (1.) It enables your firm to dominate the marketplace and (2.) It keeps competitors at bay – often indefinitely.

All from your value proposition.

When I use the word “moats,” what do I mean specifically? Let’s take a look.

1. Brand moat. Clients are willing to pay more because they trust your brand or believe in your reputation. Research consistently shows clients are eager to spend more on brands. Think Coca-Cola, Mercedes-Benz, and Skadden, Arps, Slate, Meagher & Flom.
2. Secret moat. This typically refers to a process or intellectual property that makes direct competition with your firm difficult. This could be your client lists, a unique process, a proprietary database, or unique training methodology. It’s something that’s created or developed organically, and it gives firms a competitive advantage in the marketplace.
3. Toll moat. These are firms with exclusive or dominant control of a market or niche. This control means you’re typically the only game in town. Clients must come to you if they want “it.” Google, Comcast, and your internet and utility company are all examples of toll moats. 
4. Switching moat. This is a firm that’s enmeshed in their client’s business. There are varying degrees of enmeshment. It can be as simple as knowing everything there is to know about your client’s matter or as complex as equity stakes and co-ownership. The idea here is simple. Clients can switch at any time, per their agreement, but doing so is more hassle than it’s worth.
5. Price moat. You’re able to compete via a significant price (low or high) advantage. You’re able to provide clients with a price they’re unlikely to get anywhere else.
6. Performance moat. You’re able to produce results or outcomes other competitors cannot consistently. You bring your experience, expertise, and knowledge to bear in a way that’s measurable but difficult for other competitors to match.

There’s a thin line here. Legal and ethical guidelines constrain you. This is a very good thing, but it also requires that you tread carefully. It’s illegal and unsavory to trap clients in a predatory relationship. It’s reasonable to use the golden handcuffs, legal benefits that encourage or motivate clients to stay.

You’ll need to be careful.

That said, you need a strong value proposition. Simply presenting yourself as yet another option is no longer an effective strategy. Creating a strong value proposition is how you outperform your competitors by 1.5x.

Let’s say you have it. You’ve created a strong value proposition, one that appeals to incoming clients. How are they going to respond?

Clients will approach you with reverence

They’ll be respectful and appropriate. This isn’t altruism, it’s desire.

A compelling value proposition generates intense desire in your clients. It motivates them to do whatever it takes to secure your help. This is the response clients should have to your firm.

This could mean you’re:

• Developing a unique service process (i.e., hiring all-star associates, litigating, drafting documents, etc.)
• Making a compelling promise, one you’re legally able to make (i.e., all calls returned within 2 hours, day or night)
• Creating a strong, trustworthy brand via consistent advertising, a powerful review profile, and branding (i.e., Skadden)
• Creating helpful software, sharing it exclusively with clients, free of charge (i.e., real estate deal finder)
• Offering add-on services, tools, and resources to create the “golden handcuffs“
• Creating innovative-yet-legal alternative fee arrangements (e.g., fixed fee, subscription or insurance models)

Your value proposition is a unique (one-of-a-kind) promise to your clients. It’s that one, specific, measurable thing that sets your law firm apart. It’s a persuasive, results-driven argument that gives clients a compelling reason to work exclusively with your firm.

It’s a differentiator. A way for clients to quickly (and neatly) assess your firm. To filter and sort through the hundreds or thousands of firms competing for their attention and their dollars.

Traditional law firms are struggling to compete

If experts are correct, we may be entering into yet another recession. Traditional firms were growing at 1 to 2 percent each year before pandemics, and protests changed the course of our economy. Revenue growth was modest.

Virtual law firms have changed the game.

They’re outpacing traditional firms, and they’re doing it in a consistently quantifiable way. These law firms provide clients, attorneys, and shareholders with the kind of win/win value they’re looking for. Clients get better representation and value for less. Attorneys receive more money, time, and freedom, and shareholders receive a huge financial upside.

Before the pandemic, remote work was only available for the affluent few.

Roughly 9.8 million out of 140 civilian workers total in the U.S. had access to remote work in their workplace. Today, an estimated 70 million-plus Americans now work remotely. These numbers continue to rise as employees state they would rather work from home forever.

The legal industry is no different.

The pandemic has changed the legal industry forever. More and more firms are going remote, virtual law firms are on the rise, replacing the traditional law firms.

Law firms with the right remote workers win

The demand for attorneys is growing rapidly. An ABA Journal post found attorneys are in high demand amid the Coronavirus pandemic, protests, and the economic downturn. Contrary to expectations, clients are desperate for help on complex legal matters.

“From advising employers how to respond when an employee tests positive for Coronavirus to counseling employees afraid of catching it at the office, lawyers are working around the clock to help clients navigate the uncharted legal waters sparked by the rapidly spreading COVID-19.

These lawyers and firms are helping others at the same time they are grappling with the significant effects of Coronavirus on their own operations, such as the need to close their offices and require employees to work remotely.

Firms are also bracing for the pandemic’s long-term economic impacts that could boost demand for some legal services, while depressing the market for others.”

The right remote team wins in the end.

But why?

The skills and competencies needed to perform at a high level in a traditional law firm are not the same skills needed to perform in a remote, distributed, or virtual environment. More importantly, hiring the wrong people has a detrimental effect on law firms.

How to hire the right remote workers

Research by Dr. Bradford Smart, author of the bestselling book Topgrading, and founder of Smart and Associates,  found that a single mis-hire costs organizations 5x to 27x base salary. His research shows that a single mis-hire with an average salary of $114,000 would result in a total mis-hire cost of $2,709,000 or 24x the salary!

It’s a mistake law firms can’t afford.

There is a lot at stake for law firms, especially in our current economic climate. Here’s how you can guarantee that the people you hire will be the best fit for the job.

1. Use your network. Reach out to people you have worked with in the past. If you had a great relationship, ask if they are in touch with any other candidates.
2. Meet-ups and events. Reach out to specialty clubs or groups, e.g., the rotary clubs, investor clubs, specialty forums, etc.
3. Employee branding and reviews. A strong employer review portfolio leads to a 50 percent increase in qualified candidates and a 50 percent cost-to-hire reduction.
4. Employee advocacy. Give engaged “patriot” employees the tools they need to pursue A-player candidates on their own. Incentivize employees with a strong offer, e.g., if a referred associate is still an employee after six months, you reward both the referred and referee with $5,000.
5. Freelance remote workers. Working with freelance remote workers allows you to evaluate potential employees in a live setting. You can attract and convert high-value talent at a considerable bargain.
6. Use specialty job sites and job boards to find trustworthy freelance associates, paralegals, and managers who you can test out on a trial basis.
7. The traditional approach. If all else fails, you can take the conventional method via ads, social media, referrals, etc.

At this point, your applicants should be rolling in.

At this point, it’s a good idea to ask yourself about the culture of your firm. According to Jeff Lawson, chief executive at Twilio, your culture is living values, here’s how you apply it. First, write your values down; make them available to everyone in your firm. Next, you create a culture when everyone works together to live these values out in their day-to-day work life.

This is especially important with remote workers.

When you cement your culture, you set the tone for the kind of employees you will attract to your business.  If you want aggressive go-getters in your law firm, you’re going to attract that if that’s already present in your culture.

What you give you receive.

Ready to sort through your list of potential candidates? Here are some steps you can follow when hiring remote employees.

1. Sort potential applicants in a private project via your practice management tool.
2. Use a remote-friendly interview tool like HarQen to screen candidates via text, audio, and video interviews. Use HarQen to conduct tandem digital interviews.
3. Test candidates with a freelance project or bring them on, on a contract basis.
4. Ask candidates to schedule a three-way call with the references on their resume (A-players will jump at the chance to show off their skills, B and C players will disqualify themselves from the hiring process). 
5. Introduce new hires to the entire team.

At this point, your new hires have joined the firm. How do you go about onboarding your new associates or support employees? The onboarding process is relatively straightforward:

• Make sure each new hire has the necessary credentials, docs, software, IT hardware, and handbooks they need.
• Send new hires the paperwork they need (e.g., HR, healthcare, legal, tax, and financial documentation).
• Provide your new hires with the training aids, modules, and materials they need to get up to speed.
• Pair new hires with an existing buddy hire, an experienced associate, for example, and make sure new hires can reach out to them for help, guidance, and connection.
• Ping partners and managers to outline goals, objectives, and expectations.
• Introduce new hires to existing employees.
• Send them a welcome care package to ensure they feel like part of the team.
• Schedule training for your new hires with IT, product, or service demo experts in your organization.
• Schedule regular follow-up meetings and check-ins for the first 90 days to 1 year.
• Arrange an in-person get-together if they are near your location or the location of their buddy hire.

Successful onboarding is less about a knowledge transfer and more about seeding relationships and establishing connections.

Remote teams outperform traditional teams

Research shows remote work can produce better results for your law firm. Remote work teams outperform those in a traditional in-house environment. They’re 13 percent more productive, and those who choose remote work say they’d like to work this way permanently.

Remote work is here to stay.  

Hiring a remote employee doesn’t have to be a terrifying ordeal for your law firm. It can be profoundly positive, producing exceptional results for your firm; with the right talent and skills, you’ll be able to weather the cultural and economic storms the legal industry currently faces.

According to a legal trends report, 71 percent of lawyers say they consider revenue their most important indicator for law firm growth. The same report found that, for 40 percent of law firms, growth is either stagnant or in decline. 

These are challenging times. 

Here’s the surprising part about high-growth law firms. They grew 20 to 30 percent year-over-year, increasing their revenues by 120 percent from 2013 to 2017. 

What’s their secret? 

It’s simple; these firms keep their lead flow, the number of prospects coming to their business high. Once they win these clients, they work hard to keep them. It’s all about lead flow. 

How to grow during stagnant demand

According to the 2020 Report on the State of the Legal Market, growth in the legal industry has been stagnant. “Since 2012, demand growth has been slightly up in some years and slightly down in others, creating a growth pattern that is essentially stagnant. That stagnation continued in 2019, with demand growth virtually flat from the preceding year.”

How do you grow your law firm when demand is stagnant? 

There are several business development strategies you can use to grow your law firm. Today we’re going to focus on one strategy in particular. 

Dead leads. 

According to SugarCRM, dead lead refers to a prospective client who has abandoned the buying or evaluation process. These prospects have low to zero potential while active in your funnel. This requires some discretion. 

Clients abandon the evaluation process for a variety of reasons. You must segment these dead leads as quickly as possible. Here are the various types of dead leads you’ll need to identify: 

• Delayed buyers. These are clients who, for whatever reason, decided that it wasn’t a good time for them to hire a law firm. They didn’t tell you that during the negotiation process and promptly ghosted you. 
• Wrong target audience. These prospects were never a proper fit for your law firm. You focus on medium-sized businesses, but these leads are startups or entrepreneurs-in-waiting. 
• Buyers trapped by gatekeepers. These prospects contact you then hide behind their gatekeepers. They refuse to engage with you, but their gatekeepers lack the authority to make decisions. 
• Non-communicators. They reach out to you. Then they ghost you permanently. 
• No budget. These prospects are eager and attentive. Everything about these prospects screams “amazing client.” You get your hopes up, and you realize you’d like to win this client — until you find out they don’t have any money. 
• Indecisive or fickle. For these prospects, their yes means no, and their no means yes. You find yourself asking for the same information over and over again. Extracting a decision from them is miserable and tedious. 
• They’ve given you a firm No. This prospect wants nothing to do with your firm, and they’ve made that abundantly clear. They haven’t been removed from your list for whatever reason, though. 

Here’s why this is important. 

If you use this method, you’re going to see a lot of dead leads. You must use the right heuristics to evaluate and sort through dead leads with “potential” and those without potential. What does this mean? 

In this scenario, we’re only looking for delayed buyers. 

The right partners have dead leads with potential

In my [previous post], I mentioned partnering up with local sources to create what I called a local SEO traffic pump. It’s a referral system that drives a consistent stream of prospective clients to your website via online and offline sources. 

If you’ve followed the instructions in that post, you should be able to attract channel partners who are willing to send you referrals. Here’s how you attract 50 percent more clients to your business. 

You ask your channel partners for their dead leads. 

Here’s a template you can use to pitch clients on your irresistible offer and generate more business seemingly overnight. 

[Hi Partner Name], 

I wanted to thank you for everything you’ve done to help me. I’m incredibly grateful for the support and trust you’ve given me. 

I wanted to get your thoughts on something. 

If I could produce ## percent more cash flow for you each month via your dead leads, would you be interested? I’ve done this for others, and I can share the details with you if you’re interested. 

Let me know, 

[Signature]

If you’ve used the traffic pump to build a relationship with your partners, there’s a relationship there. You’re essentially trading on that relationship to provide their dead leads with more value. 

How do you create value? 

Peter Thiel, PayPal founder and former attorney, created a model that firms can follow. This model provides firms with the clarity they need to: (a.) Increase revenues consistently year-over-year (b.) attract and retain profitable, top tier clients.

Here’s how it works.

1. Create X dollars of value for partners.
2. Capture Y percent of X.

You create something of value for your partners. Let’s say you’re a real estate attorney. You’ve used the local SEO traffic pump to partner up with investor clubs, real estate brokers, and lenders. If you’re following Thiel’s model, you can: 

• Provide investors with due diligence checklists and worksheets
• Teach investors about the deals that will erode their returns
• Give them a list of legal deal breakers  
• Provide them with a blacklist, vendors with a poor track record

You’re looking to create an irresistible offer, a strong motivator that gets their dead leads to pay attention. What if you’re not sure about the offer? Reach out to your partners’ current customers and get their feedback. Ask them about their desires, goals, fears, and frustrations. 

Then create a solution that helps to solve one or two of those. 

You’ll want this deal to be win/win for your clients, so you’ll need to structure the deal so it makes sense. This could be bundling their product with your service (via a subsidiary), referring them back to your partner afterward, or paying your partner for the lead. 

Here’s an important requirement. 

Your partner’s audience needs to come to you or your site, a property under your control, to redeem your irresistible offer, this is non-negotiable—no control over redemption, no deal. 

The first partner is the hardest. 

Once you’ve produced value for your first partner, you can do it for any subsequent partners that follow. Use the first partner as a case study to attract new partners in the future. Lead with the traffic pump, then once you’ve earned their trust, ask for their dead leads. 

It’s an easy win. 

It costs your partners nothing. It gives you a significant amount of data you can work with, and you can monetize that data (appropriately and respectfully) in a variety of ways. It’s a win for everyone involved, including their audience. 

This keeps your law firm growing during stagnant demand

This strategy is effective on its own, but it’s even more effective because it’s something average law firms aren’t doing. Seventy-one percent of lawyers say they consider revenue their most important indicator for law firm growth. This is also why 40 percent of these law firms say their firm’s growth is either stagnant or in decline. 

It doesn’t have to be your story. 

With channel partners, you can attract 50 percent more clients to your law firm. You can create a traffic source that bypasses Google, paid advertising, or traditional business development channels. 

It begins with your traffic pump and continues with dead leads. 

Using pen and paper or utilizing a running spreadsheet are the number one ways you may be missing out on revenue. Without the right time tracking software, you’re prone to revenue leakage by not accurately capturing your time.

Here are a few ways time tracking software can help your law firm gain a better scope of work and increase revenue:

Law firms receive a small fraction of revenue

A law firm wins a client. They work hard on their client’s matter, and they produce exceptional. They’re now ready to submit their invoice to the client for payment. The problem here is the fact that invoicing has already gone wrong.

1. Instead of tracking their time as-it-happens, associates in the firm rely on reconstructive billing. Research shows reconstructive billing costs firms 50 to 70 percent of their revenue.
2. They construct their pre-bills, but partners and firm leadership is concerned that clients may complain about the price or reject the invoice altogether. The pre-bill is discounted, and the firm accepts another minor loss.
3. Invoices are sent to clients who, no surprise, complain about their invoice. If it’s a large client, the firm discounts their invoice further, accepting additional write-downs.
4. Fear of losing the business means the firm will most likely set their rates lower to capture new business, then fight to increase those rates over time, until the client feels mistreated and decides to leave.

If invoices are sent late, or they’re not received, firm losses are even higher. These mistakes mean billable leakage continues to erode revenue over time.

If your small corporate law firm made $1.2 million last year, a 70 percent increase would bring your total revenue to $2.04 million. That’s an additional $840K in revenue!

The ABA shared research outlining the losses. 

• You lose 10 percent of your revenue (billable time) if you record time entries the day of, once a day.
• You lose 25 percent if you wait 24 hours to record your time.
• You lose 50 to 70 percent if you wait just one week.

The attorneys in this specific case study were submitting their bills at the end of the month. If we’re projecting this out, this means a potential loss of revenue to 200 to 280 percent.

How to minimize financial loss

You’ll need three ingredients, firm-wide standards, tools that simplify timekeeping, and on-demand accountability. Let’s take a closer look at each of these, so we understand what’s needed.

1. Firm-wide standards

Are your associates using the same billing increments, or are they all relying on their own formats and standards of measurement? Do attorneys in your firm submit their billable time consistently? Do you have a system in place to audit compliance and performance standards?

Your firm should have a clear set of standards that everyone, support teams to partners, follows.

2. Simplifying timekeeping

The easier it is for timekeepers in your firm to track and manage their time, the more likely they are to do it. Spreadsheets are a standard solution for law firms, but they’re also problematic. Spreadsheets siphon revenue away from the firm via duplicate work and double entry.

It’s common for firms, with several clients, to use multiple spreadsheets for each client where each associate has their own copy of the time tracking spreadsheet. In scenarios like these (or even single spreadsheet environments), billable leakage is inevitable, but why? Associates are still relying on reconstructive billing.

The best timekeeping option is one that’s centralized, with firm-wide standards built-in.

3. On-demand accountability

According to a 2019 Altman Weil report, law firm partners routinely resist change in their organization. What’s frustrating about this resistance is the fact that it trickles from the top-down, creating firm-wide challenges that compound over time. 

“In 69% of firms, partners resistance to change is an embedded drag on progress, and recent economic successes may obscure any clouds on the horizon — at least for the shortsighted.”

The problem for many firms is the fact that they aren’t aware that partners and associates have decided to ignore firm-wide mandates. A centralized time tracking system makes this resistance known throughout the firm, providing built-in accountability, something spreadsheets don’t offer.

What sort of system provides this kind of value and minimizes financial losses?

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Try the Best Time Tracking and Billing Software for FREE

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The case for contemporaneous time tracking

Time tracking requires discipline to be effective. If you’re dealing with manual or insufficient time tracking methods you’ll be forced to deal with:

• “Helpful” employees who choose to recreate or tweak existing formulas (i.e., billing increments) in your spreadsheets without permission
• A spreadsheet that’s too difficult for novice employees or too simple to capture the data you need to boost revenue
• Billable leakage due to reconstructive billing, missed time entries, over or underbilling, and an increase in non-billable work
• Attorneys or partners who disagree with your methodologies choose to do things differently; maybe they tell you maybe they don’t  

A contemporaneous billing solution needs to solve these problems directly. If you’re looking to increase revenues by 70 percent or more, you’re going to need a system that:

1. Verifies and monitors contemporaneous billing in your firm. Timekeepers must track their time automatically, as-it-happens, but it also needs to be simple and easy to do.
2. Provides you with the reporting you need to audit every timekeeper in your firm. Your audit and accounting teams should have what they need to verify compliance.
3. Uses a task management system to notify involved parties (e.g., managers, partners, and timekeepers).
4. Provides firm leadership with timekeeping reports at specific intervals (e.g., daily, weekly, monthly, quarterly, etc.) outlining essential metrics and key performance indicators.
5. Verifies billing guidelines are met and that invoices are prepared per client guidelines.
6. Works to minimize/eliminate eBilling errors and mistakes.

If you want to increase your revenue rapidly, you’ll need to focus your time and attention on minimizing common billing mistakes. This isn’t about aggressive business development, it’s about creating the right habits.

This is done by creating habits with a behavioral model. A behavioral model is a collection of data you use to make predictions about future behavior. I’m oversimplifying things here intentionally. I don’t want us to get bogged down or lose focus.

BJ Fogg, a researcher at the Stanford Persuasive Technology Lab, created the Fogg Behavioral Model (FBM).  The FBM was designed to answer a simple question: “What causes behavior change?”

The FBM shows there are three elements to behavior change.

• Motivation. A compelling reason for people to change their behavior.
• Ability. The capability to change behavior in the desired fashion.
• Triggers. A prompt or call-to-action that tells people to “do it now!”

I break these behavioral models down in detail here. So why is a behavioral model important for your law firm? It’s crucial because these behavioral models produce revenue. The better you are at creating and fostering healthy and profitable habits in your law firm, the more income you’ll receive.

Get partners and firm leadership to weigh-in, and you have the buy-in you need for them to take a chance. Share the rewards with them (i.e., a large bonus check), and you’ve earned their continued support.

Clean-up bad habits to double your revenue

Choose a centralized and contemporaneous time tracking system to record your billable and non-billable time. Audit performance and measure compliance, do what you can to record activity as-it-happens. Develop and maintain good habits and you’ll find you receive more of the compensation you deserve.

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