Vol. 72, No. 12, December 1999

Managing Risk

Careful Timekeeping
Pays for Itself

Spending a moment to record your time is one of the best investments you can make. Here are six reasons why.

By Ann Massie Nelson

There's an old joke about a lawyer who dies and appears on the doorstep of heaven. St. Peter exclaims, "My, you're in remarkable shape for a fellow who is 145 years old." The lawyer says, "What? I'm only 68." "You can't be," says St. Peter. "I have your time sheets to prove it!"

Keeping precise, up-to-the-minute time sheets is a painstaking chore, a housekeeping duty that most lawyers would just as soon put off. But poorly kept time records can cost enormously in lost revenue, client dissatisfaction, and malpractice or ethics complaints.

Your time sheets probably won't guarantee you admission to the bar in the hereafter, but there are six reasons why you should keep scrupulous time records, even for contingency fee cases or flat fee transactions. According to Thomas S. Sleik, a partner in the La Crosse firm of Hale, Skemp, Hanson, Skemp & Sleik, good timekeeping:

1) Informs and reassures clients. Time records allow your firm to produce itemized bills that educate clients about the legal process and show the time and effort you have spent on their behalf.

Rather than dashing off a one- or two-line bill for "estate plan preparation," send an itemized bill that impresses the clients with the time you spent interviewing clients, inventorying assets, researching applicable federal and state tax laws, drafting of will and trust agreements, and so on. (Note the use of verbs to show action.)

A monthly, itemized bill also assures the client you are working on his or her behalf, even if resolution of the matter is months away. Conversely, the client can question or comment on your activity before you get too far off the path with services or expenses the client feels were unwarranted.

2) Documents what you did, when. Time records memorialize what tasks you performed, the minutes or hours involved, and the sequence of events. Make it a habit to document your time immediately after the client walks out the door, when you hang up the phone, or when you put away the file. Trying to recreate time records at the end of a week (sometimes even at the end of the day) will result in errors.

"Memories fade. If things go south with a client, detailed time sheets could substantiate your memory in the event of a malpractice claim," Sleik says. One of the first things the former client's new counsel requests in prosecuting legal malpractice claims is a copy of the attorney's time records.

3) Helps you measure your productivity. Where did the time go? Your time sheets have the answer. Sleik uses an automated timekeeping program that allows him to easily analyze his time use. For example, he can get a report showing billable versus nonbillable hours, time spent on contingency fee matters, percent of time devoted to different areas of practice or to firm activities or administration, hours spent working at different rates, and so on.

4) Provides a basis for reviewing associates' work. In large group practices, time records are useful in determining compensation and promotions, but Sleik recommends you look beyond billable hour quotas when analyzing associates' time use. How efficiently are associates using their time? Why is a new lawyer spending a majority of his or her time in one area of practice? What nonremunerative responsibilities do associates have? Do you encourage associates to report pro bono work? Are your associates meeting their continuing education requirements?

5) Reduces staff time and potential confidentiality breach. "My secretary, who has been with me for 26 years, had to set aside two hours every Friday to transcribe paper time sheets for one other attorney and me. When we installed computer terminals in attorneys' offices about 10 years ago, she pointed out that I could enter my own time records as quickly as I could write them on a form, giving her two extra hours a week for more productive work," says Sleik.

Lawyers who enter their own time records can use their judgment in describing the services provided. Because time entries often are merged directly into billing statements, staff members may inadvertently reveal information that the lawyer would not want to fall into the wrong hands. If the representation involves a government entity, the lawyer's bills may be revealed under the Open Records Law. Detailed time records could reveal litigation strategy and jeopardize the client's position.

Ann Massie Nelson is communications director at Wisconsin Lawyers Mutual Insurance Co., Madison.

6) Contributes to firm profitability. Lawyers who, one or two weeks later, try to reenact time spent on a file are more likely to undercharge the client than overcharge. Even with contingent fee cases or flat fee transactions where you might think timekeeping is unimportant, you need to record your hours to analyze case selection, Sleik points out.

If you put off recording your time, you may need to do a little soul searching. Do you value all your time or do you write off certain tasks? Do you feel ambivalent about helping clients (particularly those with limited resources), then billing your hourly rate? If work isn't done in a traditional setting, do you neglect to record the time because you feel it wasn't "real" work?

"You can't bill for everything," Sleik says. "At the same time, don't sell yourself short. A chance meeting with another lawyer while you are waiting at the courthouse may turn out to be very valuable to your client. Sometimes, short services have long results."