We are almost finished with the fourth area of the five areas that make up every business in the world. This fourth area is “billing.” As you know, the other four areas are that make up every business in the world are: “Clients” or “customers”; “Administration”; “Getting the work done”; and “Collecting.”

In finishing up talking about “billing,” we have been discussing various reports that can be made up from your computerized billing system or that you can put on Lotus spreadsheets that will allow you to very easily monitor and manage your law firm. This information comes directly from your “billing” system you use in your law firm. We started off talking several weeks ago about seven reports that we get from our computer system, those reports are as follows:

1. Year-to-Date Total Receipt Allocation Report;

2. Timekeeper Productivity Report;

3. Productivity Report by Category for Each Timekeeper;

4. Summary Accounts Receivable Report;

5. Detail Accounts Receivable Report;

6. Write Off Verification List; and

7. Write-Up/Write-Down Report.

From these seven reports, we make up four Lotus spreadsheet reports as follows:

1. Cash Received and Fees Charged;

2. Time Billed;

3. Production Totals, Responsible Attorney Totals and Net Responsible Attorney Totals; and

4. Total Production and Total Paid.

Last week we talked about “cash received and fees charged.” This week we are going to talk about the “time billed” report that we put into a Lotus spreadsheet.

The format for our Lotus spreadsheet “time billed” report is included in this article. As you can see, the form is made up for the whole year. It contains a column for the months January through December and at the end has an attorney total, a monthly average and a projected annual. The left hand column is a list of every lawyer and paralegal and other billers in your law firm that you want to track.

The form is broken down into three categories as follows:

1. Time billed;

2. Time worked; and

3. Total hours.

The time that is billed is the actual time that each lawyer bills each month to the clients. Not all of your time is billed, some of it may be held on a month-to-month basis, and some of it is contingent fee. It is very easy to see exactly who is doing what work in terms of what is being billed to the clients. The attorney total is self-explanatory, the monthly average is also self-explanatory and the projected annual lets you know whether or not those individuals are going to be meeting their annual budget on a projected basis. Also, there is a total at the bottom for each month that will show you the total number of hours that have been billed by the firm for that particular month. Again, these can be measured against stated goals for the year.

I must admit I am way more interested in the “time worked” than I am in the “time billed” section. Obviously, you have to pay attention to what you are billing, but eventually everything will get billed if you have billing systems in place, and so the amount of time worked is obviously very important. If you have a goal of 2,000 hours per person per biller per year, that averages out to 166.66 hours per month. It is pretty simple to look at these numbers and to see who is meeting their goal on a month-to-month basis. Again, there is an attorney total, a monthly average, and a projected annual as well as totals at the bottom of the columns.

The last section is total hours. In order to differentiate this section of the report from the other sections of the reports, the bottom of the form has the key as you can see, and gives you the definition of what each of these categories is. Note the total hours equals all current month time worked and billable time plus all non-billable time. Frankly, our law firm does not really keep track of non-billable time and so this category is hardly every utilized. In some cases, we may have people putting in administrative time, and if that is done, this is a good way to be able to keep track of this administrative time.

As I previously stated on many occasions, what I do is try to review this information once a month, look at the trends, look at the monthly averages, and promptly address any issues that are raised by these statistics with the individuals involved. Once this is done, this information is filed away and is not usually utilized until the following month’s statistics come out and are put on the Lotus spreadsheet.

I know I keep repeating this phrase over and over, but “you can’t manage it if you can’t measure it!” If you have this kind of information available to you on a monthly basis, and if you put it into a Lotus spreadsheet so you can see trends and averages, you will become a very proficient and efficient manager. Don’t be afraid to share this information with the people who are actually putting in the hours. Set goals and expect goals to be met. Work with people who are not meeting their goals so they can learn to do a better job and to meet their goals. Reward those people who are meeting and exceeding their goals, and make it known to people that they will be rewarded if they do their job.

Recently I heard about a name for people who simply could not get the job done. These people are called “poor pitiful Pauls” or “poor pitiful Paulines.” These people always seem to have some reason why they cannot get the job done. My suggestion is that you coach them and encourage them, and if they still cannot get the job done, replace them. Having the proper tools available to document their performance is not only critical with regard to you being a good manager, but is also critical with you being a wise employer to document any disciplinary action, and in particular, any dismissal. As the old saying goes, “the numbers don’t lie.”

Next week I am going to be talking about production totals, responsible attorney totals, and next responsible attorney totals as we set them out on our Lotus spreadsheet. I think you will find this information particularly interesting because this is where the “rubber meets the road.” We’re now going to be talking about individual’s actual production and the actual business they produce for the law firm. You can only imagine how near and dear that subject is to my heart. I think you will find some of my observations quite interesting.

Talk to you next week!

Jim Wirken is a civil trial attorney and the Chairman of the Board of The Wirken Law Group in Kansas City.