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By Douglas Levy

Dolan Media Newswires

Michigan lawyers spend about a third of their time at work on nonbillable, business-related activities, according to a new national survey.

The Lexis/Nexis "Law Firm Billable Hours Survey" reported that in Michigan, nearly 33 percent of the hours that lawyers work goes unbilled.

Lawyers here landed right in the middle of the survey, compared to their colleagues in other states. The survey reported that in 23 other states, the amount of nonbillable time was higher.

While law office management gurus suggest unbilled time isn't necessarily a bad thing, there's a difference between quality unbilled time and flat-out wasted time.

Elizabeth Jolliffe, who runs a legal coaching service in Ann Arbor, explained that, besides administrative, practice management and business development time, billable time is lost to poor timekeeping practices (such as not recording the time until later in the day or week), and not billing all of one's time on a project.

"Many lawyers write off a lot of their time because they believe the work took them longer than it should have," said Jolliffe, who is chair of the Law Practice Management & Legal Administrators Section of the State Bar of Michigan.

"They erroneously believe they are inefficient and slower than other lawyers. Other lawyers write off time because they did spend too much time on a project and didn't know when to stop."

According to the survey, which polled nearly 500 attorneys across the U.S., lawyers at larger firms have higher average billing utilization rates than firms with one or two attorneys: "More than twice as many law firms with six or more attorneys reported spending less than an hour a day on nonbillable activities compared to the solo and two-attorney firms."

Meanwhile, nearly 70 percent of survey participants reported that client development activities, such as networking and building client relationships, had relatively little impact on their ability to focus on billable client work.

Rethinking the process

Nearly any nonbillable activity at small firms can be time-consuming, said Terrie Wheeler, a Minneapolis legal marketing advisor.

"Small firms are always going to spend more time on administrative tasks because they can't afford to hire people in HR, marketing, accounting, file maintenance, etc.," she explained.

In contrast, "the reason larger firm lawyers are more productive is because they have a large administrative team to handle many nonbillable details."

And keeping up with things to make one's practice better can have high costs.

"One of my lawyer clients realized that reading emails and online news in his office led him astray for a couple of hours at the start of every work day," Jolliffe recalled. "He lost time worth between $2,000 and $3,000 a week."

With her help, he developed a plan for how long and where he did this reading; he increased his productivity in the office by more than 20 percent.

And, with mobile technology, she said that email can be checked before going into the office in the morning; that way, billable work can be started immediately upon arrival at the office. She further suggested that an attorney should stick to only billable work in two-hour blocks of time once he/she arrives.

Carl Herstein, chief value partner at Detroit-based Honigman Miller Schwartz and Cohn LLP, said that some unbillable matters are meant for helping both the client and the attorney.

"For a lot of clients, [attorneys] want to understand where things are with respect to the industry they're working in," he said. "With clients, I'll spend time keeping up to date with what's going on in their business world, so that when they talk to me about a particular problem or issue, I'll have knowledge of what's happening.

"It makes me a better resource for them, and helps me understand what it is they're trying to accomplish."

Getting technological

Roy Ginsburg, a Minneapolis attorney and legal consultant, agreed that administrative tasks are routine part of the business a solo practitioner or small law firm faces in running their business.

In some cases, the attorney may be able to delegate some administrative tasks to a law clerk or simply outsource the work. In other cases, it may be more efficient to implement case management technology, he said.

But using law office management software should be weighed against the expense to install it and the time spent to adapt to that technology, Ginsburg said. The higher the invoice volume, the more likely it will be cost effective, he added.

Speaking of time, Jolliffe said that it's important to use software and apps to capture more of one's billable time by tracking and entering time immediately. (As part of its conclusion, Lexis/Nexis added that "there's no excuse for using legal pads, napkins, or other analog methods.")

In addition, Jolliffe suggested that attorneys play with new technology outside of work, not during the work day.

Finally, she advised that an attorney identify his or her distractions and timewasters by recording how all of his/her time is spent on a daily basis, billable and nonbillable, for a full month.

"This is similar to what people do to learn how they spend their money each month," she said.

After that, a lawyer should calculate the cost of lost time by multiplying the wasted hours by his/her hourly rate.

If Lexis/Nexis does a similar survey next year, Herstein said it would be wise to include respondents who take on alternative fee work. That's becoming more prevalent among large firms such as Honigman.

"I think they're missing a significant component of understanding legal practice, because obviously people who work on alternative fee matters--and we do a lot of them in our firm-- also have nonbillable responsibilities," Herstein said.

What the survey found

The Lexis/Nexis Billable Hours survey looked at the gap between total hours worked by attorneys and the number of hours devoted daily to nonbillable, worked-related activities.

The survey was based on responses from nearly 500 attorneys. It covered attorneys from all law firm sizes, with more than 90 percent of respondents employed at firms of 20 or fewer lawyers. Michigan had 14 respondents.

Lexis/Nexis said it conducted a follow-up survey to answer: What types of activities eat up the time attorneys' work but don't bill to clients? And do attorneys at larger firms more effectively bill hours than their colleagues at smaller firms, or is billing efficiency more related to practice area versus firm size?

More than 1,000 attorneys responded, and Lexis/Nexis found that "50 percent of the respondents ranked administrative or practice management tasks--such as document management, filing, docketing, billing-- as the No. 1 or 2 activity responsible for the biggest share of nonbillable work hours."

"This finding was remarkably consistent across firms of all sizes and geographies," Lexis/ Nexis said.

The practice areas spending most amount of time on nonbillable work:

* Immigration attorneys: More than 40 percent of them reported spending more than four hours a day on nonbillable activities.

* Personal injury attorneys: 34 percent spending more than four hours a day on nonbillable activities.

Practice areas spending least amount of time on nonbillable work:

* Insurance law attorneys: 76 percent of them reported spending two or fewer hours daily on nonbillable hours.

* Labor and employment attorneys: 54 percent reported spending two or fewer hours daily on nonbillable hours.

* Litigation attorneys: 51 percent reported spending two or fewer hours daily on nonbillable hours.

Terrie Wheeler, a Minneapolis legal marketing advisor, said that there's an explanation for the differences.

"The top practices reporting the highest number of nonbillable hours all represent consumers versus businesses. It is much more challenging to market to random consumers who might need legal services," she said.

"The insurance defense work notoriously generates a high volume of work but pays a lot less because insurance companies negotiate a high volume of promised work at a lower hourly rate, thus the 70 percent productivity finding."

Published: Mon, Mar 11, 2013

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