why is time recording so important? peter scott peter scott consulting
TRANSCRIPT
PETER SCOTT CONSULTING
The importance of matter related time
A major profitability factor
An important management tool
PETER SCOTT CONSULTING
Profit = difference between revenue and overheads
If your overheads can be kept constant, then all additional revenue is profit
Building revenue in a law firm is the key to improving profitability
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Building revenue - Beware The ‘Triple Whammies’
Under pricing Under recording of time Under recovery of time
They can seriously damage your profit.How can recording time help?
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Are we pricing for profit?
How do we know we are pricing our work for profit if we do not know how much
our work is costing the firm to do?
Value of work dissection and analysis
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Without full time records on work you will not be able to arrive at the right price
on similar matters in the future when asked to quote
on matters in hand
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Leakage?
Do you know how much time, which should be recorded, you are losing each year?
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You have [ ] fee earners Each records and recovers an additional 15
minutes per day
How much more revenue will you generatein a full year?
If…
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If you under record time you are pre-judging the decision as to what is the right price for the job.
- Whose decision?- How much time did you write off last year?- How accurate is your recovery (realisation) rate?
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Health warning - beware slavishly applying recorded time
Time is an important factor but one of only a number of factors to be taken into account in arriving at the right price for the job.
Others?
See Law Society Practice Notes
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If you do not fully record time you will not be able to accurately measure it and manage it
- accurate financial analysis will not be possible- decisions made on inaccurate analysis will be flawed
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2. Fully recording time is also important for managing …
client expectations Regulatory compliance – Rule 2 Risk management
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3.Management of workloads / recruitment decisions
- who is busy?
- who is not so busy?
- do we need more / less people?
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4. Are we working profitably?
How do we know we are profitable if we do not know how much our work is costing the firm to do?
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5. How to budget for revenue
As a starting point:
Fee earners XCharge out rates XHours
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6. Are we ‘on budget’?
Fully recording time enables us to - compare performance with budget
throughout the year- Identify trends
Who measures ‘input’?
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As a starting point, look at …
Utilisation = time recorded as a % of standard working hours (220 days x 7 hours = 1540)
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Non matter related time?
Why is it measured? If information is not used then why
measure it? Decide whose roles requires non matter
related time to be measured