�

Building a Better Law Firm: An Interview with Sean Antone Hunt, Esq.

After years working successfully at a large insurance defense firm, Sean Antone Hunt had a vision.

“Large law firms are inherently conservative,” said Hunt. “That tends to limit creativity and hinder adoption of technology. I wanted to move faster.”

So in 2009, Hunt broke out on his own and started his own firm to give clients more personalized attention and greater efficiencies through improved use of legal technology.

Initially, Hunt’s idea was to provide a client portal so clients could access to their cases and files. But as he left the law firm, more and more of his clients followed. As a result, he soon found that his original plan of working solo was impractical.

Using technology to leverage the abilities of his small firm, he found that he could provide his clients with a superior level of service and communication.

Today Hunt and two associates practice insurance and commercial, corporate defense work for
clients including Unilever United States, Macy’s, J.C. Penney, Memphis Light, Gas & Water Division, U.S. Foodservice, Farmers Insurance Group, Arch Insurance Company and the City of Memphis.

“We represent large corporations that are self-insured for matters such as premise-liability claims,” says Hunt. “We also represent local municipal governments in Section 1983 and ‘slip & fall’ claims. Clients turn to us for our expertise, or when they lack sufficient in-house resources to handle the volume.”

Embracing Technology

Hunt started using Bill4Time.com soon after the formation of his firm. “Web-based time keeping is really the only way to go,” said Hunt. “We can capture our time records any time, from any location, while the details are fresh.”

He and his associates use Dragon (Dictation speech recognition software) to dictate time entries, so having a time billing application with multiple software platforms was important. “We need to capture time on iPad, iPhone, desktop…anyplace, anytime we work for clients,” said Hunt. “Bill4Time has all these options.”

Since time billing records are subject to attorney-client privilege, Hunt actually uses Bill4Time as the primary record of client interactions.

While most attorneys enter a single sentence for a time billing entry, Hunt uses Bill4Time to enter paragraphs of detailed work descriptions. There are two reasons.

The first is to benefit clients. Hunt wants his clients to have a strong sense about every aspect of their legal matters. Detailed descriptions give his clients insights and confidence about the way cases are being handled.

“When reading a time entry, I’m looking for a detailed overview of the associates’ billing activities,” said Hunt. “’Do the billing records accurately capture a logical train of thought?’ and ‘Can a client read the billing records (and notes) and immediately understand how the matter is being handled?’”

The second reason is more practical.

“I tell all my associates to follow the ‘Bus Rule’ when making time entries,” explains Hunt. “What I mean is that ‘if you were to get hit by a bus tomorrow, could I or a coworker jump right into the case and be effective for the client?’ This requires making timely, detailed time entries when the work is fresh in their mind.”

Regardless of the reason, Hunt advises associates to think carefully about writing time entries.“Before you make a time entry, ask yourself why did this work needed to be done by a lawyer and not a secretary. Clients are certainly asking that same question, so it pays to write time entry descriptions that demonstrate we’re being careful with client spending.”

At the end of the month, Hunt generates all firm invoices in a few hours. He uses the summary invoice function in Bill4Time to present clients with an abbreviated invoice, and also provides a more detailed invoice so clients have the option of seeing the detailed work descriptions.

When clients pay an invoice, the firm uses the QuickBooks connector to download all Bill4Time payments and invoices into QuickBooks. The firm’s accountant then simply uses a backup copy of the firm’s QuickBooks data to quickly prepare all legal and accounting paperwork including employment tax forms and tax returns.

Legal Spend Management

Legal spend management software (such as LSS, Counsel Link, Tymetrix) are popular with Hunt’s corporate clients. So having a time billing software solution that supports all available versions of LEDES (Legal Electronic Data Exchange Standard) is important.

“Every spend management solution has their own LEDES quirk,” says Hunt. “Our exported invoices need to speak each LEDES dialect or else we don’t get paid.”

One of the claimed benefits of legal spend management software is to use AI (artificial intelligence) to examine electronic legal invoices, then challenge expenses that look erroneous or excessive. Hunt claims his firms’ invoices are rarely challenged, a fact he credits to the ease of capturing detailed time records so close to the event.

“Firms with vague or disordered time entries are the #1 target for spend management software,” commented Hunt. “Because our invoices are quite detailed and make sense, we rarely have our invoices challenged by the algorithm.”

Over the years, Hunt has noticed certain algorithms mislabel invoices for review, so he’s trained his associates to avoid seemingly innocent punctuation or descriptions in time entries.

“For example, in Counsel Link, using a semicolon, ampersand or colon will cause a bill to be kicked out,” says Hunt.

Certain words — such as “schedule”, “coordinate,” or “call” — may also trigger exceptions, a consequence of what Hunt speculates is the algorithm trying to identify non-legal tasks that were better handled by a secretary or paralegal.

In the end, Hunt states that a legal invoice is a reflection of your professionalism. “We take pride in the fact that, even though we’re small, Bill4Time brings legitimacy to our firm since our invoices are every bit as detailed and professional as our larger competitors.”

Universal Timekeeping: A Critical Profitability Tool for Lawyers

We can no longer afford to guess at profitability.

Author: Norman K. Clark

There was a time, not very long ago, when the basic profitability strategy in most law firms was “If we charge a high enough fee, we will make a profit.”

Alas, the era of endlessly rising legal fees is over. Law firms today face increased price sensitivity in practice areas, which has imposed a general downward pressure on revenue. Any attempt to increase a fee can be expected to be met with client resistance and threats to go elsewhere for legal services.

Universal timekeeping is the one and only key that can unlock the power of the six financial indicators outlined in this article. No lawyer or law firm can afford not to make this investment in sustainable profitability and competitive survival.

If you are not practicing universal timekeeping, your management of the profitability of your law practice is little more than guesswork.

Six Key Financial Measurements

Regardless of whether a law firm has one lawyer or thousands, there are six basic measurements of financial performance that can provide accurate information about the current financial health of the practice. They also have been proven, in law firms of all sizes, to be insightful diagnostic indicators of impending problems. By paying attention to just six metrics, a law firm – especially a smaller firm – can greatly strengthen its ability to spot and address potential financial problems before they deteriorate into a crisis.

With complete, accurate timekeeping, any law firm of any size can produce these measurements. Without it, they cannot. These six time-based measurements are:

• realization rates (g., percentage of recorded billable hours that are billed to the client)
• fully-loaded operating cost per lawyer hour (e., total operating costs, including non-owner compensation, divided by the number of recorded hours of lawyer work)
• fee yield per lawyer hour (e., total fee revenue received for the entire firm, a practice group, or a matter, divided by the number of recorded hours of lawyer work for the entire firm, a practice group, or on a matter)
• profits per lawyer hour (e., fee yield per hour minus fully-loaded operating cost per hour)
• utilization rate (e., percentage of all work performed by fee earners that is billable to clients, either as an hourly rate or as part of a non-hourly fee)
• workflow leverage (e., ratio of billable work on a matter that is recorded by partners to that recorded by associates and paralegals).

“Do or Not Do. There is No ‘Try’”

There is a critically important common factor in all of these measurements: time. Without time records it is impossible to make any of these measurements. Partial time records might be considered a step forward toward accurate financial measurements, but sometimes they can be worse than no records at all. Incomplete records can produce highly unreliable results, which sometimes cause lawyers to add an even more unreliable “X factor” to their estimates of the financial health of the practice.

As Master Yoda famously implied, you don’t get credit for doing half the job.

The most common weaknesses are:

• recording only hours billed on an hourly rate
• exempting some lawyers or practice groups from timekeeping requirements
• substituting “standard hours” or “modeled hours” for the actual amount of time that was required
• vague or incomplete descriptions of the work (g., “research” or “internal consultations”), which are almost useless as management information and have a high probability of prompting fee disputes

The simplest and most cost-effective way to avoid these problems is to enforce the best practice of all in timekeeping in professional services firms:
Everyone records everything.

As the name suggests, universal timekeeping means that every fee-earner in your firm – from paralegal through the most senior partner – records every hour worked, regardless of whether it is billable time or not, and regardless of whether the client is paying an hourly rate, a flat fee, a commission, or under any other fee structure. This is the only reliable way that the members of a law practice can know what it costs to produce an hour of professional services and whether that hour is generating enough profit.

Best practices in universal timekeeping aim at ensuring the highest level of completeness and accuracy. They include:

1. Enter your time yourself. Don’t rely on an assistant to do it for you. You are the one person in your entire office who is best able to describe the work that you performed, clearly, completely, and in a way that will reduce the chances of a fee dispute.
2. Enter your time as soon as possible after you do the work. The memories of busy lawyers, no matter how diligent, become less accurate in a remarkably little amount of time. In our work with law firms on profitability issues, we have observed that delayed time recording – even after only a few days – can result in significant lost fee revenue for the firm, either through forgotten billable hours, underestimated time (which is much more frequent than overestimates), or fee disputes over incomplete or inaccurate time entries.
3. Whenever possible, enter time directly into the timekeeping system. Notes and temporary time sheets are better than relying entirely on one’s memory many days later; but every transfer of information from one record to another carries a risk of mistakes. Every fee earner should be able to record time directly into the system from wherever he or she happens to be. This makes systems that offer direct remote time recording, especially using a mobile application, an especially good investment for busy lawyers, because it is never “after business hours” in the “cloud.” These systems also take away any excuses for not following the first two best practices: do it yourself, and do it now.

About the Author

Norman K. Clark is a lawyer and co-founding principal of the international management consulting firm of Walker Clark LLC, which works exclusively with the legal profession. He is a past Chair of the Law Firm Management Committee of the International Bar Association, and is a current Co-Chair of the American Bar Association’s Transnational Practice Management Committee. He is a Professor on the law faculty of the International Institute of Business and Law, in Panama City, Panama, where he teaches a course on Law Practice Management in that school’s LL.M. program.

Norman Clark may be contacted through the Walker Clark website, www.walkerclark.com.