Zero

Lack of Automation Losing Firms Millions in Revenue

Originally published by the Artificial Lawyer

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A new survey about non-billable work suggests many firms are losing millions in revenue that could be regained through the automation of routine tasks. This inefficiency is also overworking their associates unnecessarily.

The analysis by Zero, which helps firms with mobile email management to better record billable work, is understandably promoting the importance of logging billable time (and one could argue we should move away from this approach as well – but that’s another story). Yet, there is a deeper story there around how a reliance on manual work methods reduces productivity and, to put it simply, is taking money out of partners’ pockets. It’s also leading to associates working even longer hours than needed, and in ways that don’t help anyone.

Now, the old adage states that law firms don’t have to worry too much about a lack of productivity because selling billable time is dependent on not doing things very quickly. (And if things really do need to be done fast, then you throw more associates/paralegals at the task, which also just increases the billables overall.) But, the other side to this is all the time spent on work – also done in a very manual way – that is not billable.

Have a look at Table 1.

Table 1: 41.2% of fee-earners spent 35% or more of their time on non-billable duties.

The chart shows that 41.2% of fee-earners spent 35% or more of their time on non-billable duties, with about 70% of timekeepers overall spending at least 20% of their time on work that simply could never be charged to a client.

Given that, at least at present, commercial lawyers are working very long hours because of the surge in client demand, this not only means wasted time that could have generated money for the firm – as the lawyers could have been deployed more usefully – but that those lawyers are in addition doing work they could really do without right now.

I.e. a group of associates in a deal team are already working to their physical and mental limit clocking billable time, but, if we take the results of this survey, many of them are adding plenty of extra time ‘in office’ on labour that produces no fees.

Pushing yourself to the limit for billable work that perhaps may result in big bonuses is one thing (although that is a questionable way to work….), but doing billable work and then adding a ton of other work that won’t be recognised by your employer because it’s unbillable is really something else. It’s not good for the owners of the firm, nor for the fee-earners on the receiving end of this additional strain.

Table 2 – 2/3rds feel they already work ‘too many hours’.

As shown in Table Two, two-thirds of those surveyed said they already felt like they were working ‘too many hours’. So, clearly there is a real world outcome here beyond the financial loss.

So, what are these lawyers spending their time on? Table 3 shows a variety of tasks that are soaking up this effort, detailed below in terms of hours spent per week, covering both billable and non-billable work.

Table 3: hours per week spent on a variety of tasks – some billable, some not.

It doesn’t dig into what tasks are billable vs non-billable, or what billable work may be considered low value, or is likely to be written off by the client, but we can guess at a few things. For example, email management and time entry are tough to put on a client bill. Some other tasks may or may not be billable, such as some types of research. And even if some tasks are billable, is getting associates to spend days collecting signatures for a deal a useful application of their time?

But, the main areas of contention here are clearly timekeeping itself and email management – again often related to figuring out which items relate to billable work and which don’t. Just under 80% of the fee-earners said that they spend up to four hours per week on time entry.

Now that has to be one of the legal world’s greatest ironies: lawyers working in a time-based economy, but wasting a firm’s potential earnings in the process of detailing those very same hours.

Zero’s conclusion is that the answer is to increase automation of routine manual tasks wherever possible. Not just on the time-logging and email management side of things, but across the piste. And this site would 100% agree on that point.

Table 4: ‘Do you have automation tools that address the following?’ Table shows where the answer is: ‘yes’.

So, where does Zero expect to see improvements? They pick out:

  • research
  • doc drafting
  • review of contracts
  • deal execution/the signing process
  • deal finalising/binding
  • email management (inc. email classification)
  • time entry

Now, it’s fair to say that there are plenty of software tools that can help with all of these things – or where the process is already fully digital, such as research, can be improved with more sophisticated tools.

The reality is that the answer to this challenge is not a complex one – for once. Law firms just need to invest in ‘automation’, if you want to call it that, or we could simply call it ‘legal productivity software‘, that helps in these areas.

The complex bit comes when one asks: what is stopping you from buying these things? Now the answer, as noted, has always been: we don’t feel the need as billable time hides a multitude of inefficiency sins. But, if you look at the matter from the perspective of lost time, or wasted time, or even work that is causing your staff to burn out that could be handled in a better way, then we have perhaps a new line of argument.

Of course, a more direct way of putting this is to say firms are losing millions of pounds and dollars in potential earnings. And that is true. Time spent on non-billable work is lost economic productivity across the entire legal sector.

Or as Zero says in their report: ‘[The data shows there are] at least 700 hours each year that timekeepers are spending on rote administrative tasks that aren’t helping the firm increase its revenue – which adds up to over $200,000 per year in lost billable time for a lawyer with a modest billing rate.’

For a large law firm with hundreds of fee-earners we really are talking about losing millions of pounds/dollars in missed potential earnings.

Right now, some firms may say: ‘Hey, we’ve never been busier, who cares?’ Well, the associates who are thinking about resigning because of the huge workload may care a lot. Also, when this current work surge drops off, what then? Firms will be looking to shore up partner profits. Investing in automation may therefore help in multiple ways over the long-term.

Thanks to Zero for the survey. There were 114 respondents. Chris Ford, ZERO’s CMO, added: ‘I saw surprisingly similar responses from both the timekeeper and admin sides from the very start. The overall results didn’t vary much between 20 and 100 responses. I’m confident that all our conclusions would be the same if we had 1,000 responses.’

Author

  • Chris Ford is ZERO's Chief Marketing Officer. With years of marketing leadership experience in the legal industry around the world, he leads all marketing efforts for ZERO.