We are still talking about the area of "billing" as one of the five areas that make up every business in the world. "Billing" is the fourth area. The other four areas are as follows: "Clients" or "customers"; "Administration"; "Getting the work done"; and "Collecting."

The area of "billing" encompasses every single aspect of getting money into your law firm. Just like any other business in the world, you have to do the following with regard to the concept of "billing":

1. Set the price;

2. Be sure the price includes a profit after the overhead is paid;

3. Keep track of the product being sold to the customer (in this case, time being charged to the client);

4. Keep track of the expenses that the customer is incurring (in this case, the expenses the client has agreed to pay in addition to their fee);

5. Put together and present to the client a proper bill; and

6. Collect the bill.

The above elements of billing seem so simple until you start to look at what is involved with each of the steps and what is behind each of the steps that allows them to eventually be properly taken.

This week's topic in the area of "billing" is YEARLY RUNNING RECAPS ON HOURS PER BILLER.

I know I have previously told you that I love to talk about revenue or "dollars in the door." But, I have an equal fondness for "hours." I must admit, I am somewhat amazed about my love of "hours." I think I have trained myself over the years to be a detailed person. A lot of people think I have a "whirling dervish" personality. Most people seem somewhat surprised that I seem to pay so much attention to detail. Remember my favorite Michener quote: "when the space is ordered you are free to live creatively!" It became very clear to me early on in my legal career that hours are the fuel that drove the engine of the law firm.

Everyone in the world is only given twenty-four, seven, 365. The common thread through all of our lives in humankind is we all have the same amount of time. It is what we do with that time that makes a difference. It is how productive we are with that time that makes a difference. It is how efficient we are with that time that makes a difference. It is how organized we are with that time that makes a difference.

After I had a stint in the prosecuting attorney's office in my home county, I went to work in a civil law firm. The senior partner was a fanatic about billing and hours. I have often said that I came from the "Harry Morris school of billing." I cut my teeth on understanding that hours translated into bills and bills translated into dollars. I found that this was true whether you were working on an hourly rate, a fixed fee, a contingent fee or some other fee structure that may be a blend. I handled the contingent fee cases in the office as well as a lot of hourly rate litigation and everyone was expected to keep track of their hours.

I grew up as a lawyer in a system that kept track of administrative time, marketing time, pro bono time and billable time. Every month, everyone would see the hours report on every single lawyer and paralegal in the law firm. Everyone's hourly laundry was aired whether you were a senior partner, the newest associate or the only paralegal. Once a month we would have a meeting on a Saturday, and this report would be reviewed en masse. Wow, was it revealing!

Everyone in the firm got in the habit of writing up their time every day, reviewing their time every week, and looking at the end of every month at the hours they had expended. If dollars in the door was the king, surely hours were the queen.

In every subsequent law firm that I have been in since then, I have always been a fanatic about keeping track of my time. This is true whether or not the matter is hourly or contingent. Remember, you cannot manage it if you cannot measure it! Since I left this first law firm I have always been an owner of every firm I have ever been in. I have always found it incredibly important to be sure every person who can be a biller in the law firm becomes a biller and that every month a bill gets sent to every client who agrees they will pay you on a monthly basis. The building block of every bill has been hours unless it was a contingent fee case.

Next week we are going to continue talking about yearly running recaps on hours per biller. I am sure you must realize after reading the last few articles that I think hours are pretty important. I think you will find some of my comments quite interesting. I have a goal on hours billed per year that I will share with you next week.

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.