Non-billable hours are a fact of life for any law firm. From solo practices to Bay Street giants with hundreds of lawyers on staff, there are just some things that firms have to do that they can’t charge clients for.
“There are many sources of non-billable hours,” noted Nina Lavoie. She is a lawyer with SkyLaw, a small corporate and securities law firm. “Some of the main ones are completing administrative work that is separate from client work; practice management tasks; and blogging on timely legal changes and topics that are of interest and educational for our clients,” she said. Others include “networking in order to grow our practice; client relationship development; presenting at conferences; and giving back to the community through pro bono work for the charities, social enterprises, and not-for-profit corporations that we support.”
The suite of non-billables described by Lavoie illustrates the broad range of tasks that lawyers either must do, or want to do – or a mix of both. The problem is that non-billables cost money to execute, and consume time that could otherwise be used earning money – a problem for smalls and soles, which lack the multiple revenue streams available to large practices to offset such expenses.
The good news: It is possible to reduce any firm’s non-billables total through a mix of priority-based planning, advanced technology/cloud-based apps, and ongoing watchful management. Here’s how to do it.
Choose your priorities
Prioritize your mix of required non-billable hours (administration, client contact, and marketing for new clients) and desired (such as blogging, public speaking, and pro bono work), and then decide how much time you can afford to allocate to each.
The actual mix can vary from firm to firm.
For instance, at SkyLaw, “we aren’t looking to reduce the number of hours that we spent on pro bono work we do for charities, organizations and not-for-profits,” said Lavoie. “So we focus on finding the right technological tools and the right people in our firm to manage various non-billable tasks, which in turn reduces the total number of hours spent on completing non-billable work.”
Seek technological help
As Lavoie pointed out, third-party technology and apps can help firms reduce their non-billable hours by letting them do many non-billable tasks more efficiently.
A case in point: The online service uLawPractice provides lawyers with a complete, updated suite of practice management tools for $44/ month ($34/month if paid yearly).
"Our cloud-based software merges practice management with legal accounting, to provide you a fully law society-compliant and audit-proof system," said Praveen Srinivasan, uLawPractice’s Chief Sales Officer. “As well, we track your pro bono hours, so that you can see how much non-billable service you are providing on an ongoing basis, and the amount of potential revenue that could have been realized.”
Cloud-based solutions can also level the playing field between solo practitioners and large firms. “If you are a solo using Word 365 in the cloud, you are employing the exact same technology as a giant law firm on the same office software platform,” said Ivaylo Nikolov, Director of Information Technology at Davies Ward Phillips & Vineberg LLP and President of The Law Office Management Association. “This is why solo and small firms should move to cloud-based applications and services as soon as possible,” Nikolov said.
The lawyers at SkyLaw have reduced non-billable hours by using the Slack messenger service to quickly send staff instant messages, rather than composing time-consuming complex emails. This boutique law firm also relies on Evernote to compile and share notes in real-time during meetings. “Evernote’s cloud-based platform allows me to get up to speed on something I have missed on my own time, without having to ask someone to loop me in,” Lavoie said.
Avoid false economies
One of the most tempting ways to reduce non-billable hours is by slashing expenses wherever possible. A word to the wise: Don’t.
You may save money in the short term by not paying someone to maintain your office computers, or not buying the latest security software, but you’re gambling with firm resources if you try. Likewise if you don’t update your software and hardware to more efficient models when they become available will save you the immediate cost, but cost you money in the long run.
Some steps taken to reduce expenses can end up undermining your ability to obtain paying work – for example, wasting your potentially billable hours doing administrative work instead of hiring a lower-cost professional to do it.
“If you focus only on hours that you can actually bill out to the client, you’re probably not investing in the appropriate levels of talent development and types of compliance systems that clients increasingly demand,” said Amar Sarwal, VP and Chief Legal Strategist with the Association of Corporate Counsel. “In this new normal, an inordinate focus on billable hours can seem penny safe, pound foolish,” Sarwal said. “Rather, law firms should re-examine their profit model to ensure that they’re taking advantage of all available levers, not just the hours that they can bill.”
The payoff
It is possible for solo and small firms to reduce their non-billable hours; freeing up time for more billable hours in the process, managing their businesses more effectively, and delivering improved client customer service in the bargain.
This has certainly been the case at SkyLaw. Thanks to their priority-based planning, deployment of advanced technology and cloud-based apps – and ongoing monitoring of their non-billable/billable hours balance – this law firm is doing better than ever.
“The results thus far have been substantial,” said Lavoie. “We have been able to work more efficiently individually, and as a team. It is easier for us to keep track of our colleague’s schedules and the goings-on in the firm. We are more organized – and our inbox is less full.”
James Careless is a frequent contributor to CBA PracticeLink.