The Recap: Looking Back On Your Work Process
We are still talking about the fourth of the five areas that make up every business in the world. That area is “billing.” The other four areas are: “Clients” or “customers”; “Administration”; “Getting the work done”; and “Collecting.
In talking about the area of “billing,” it is very important that you talk about all of the administrative aspects of “billing” to be sure you understand that “billing” is not just keeping track of your time. The concept of “billing” is multifaceted. “Billing” is being sure that you bill your clients on a timely basis. “Billing” is being sure that you keep statistics on whose time was billed. “Billing” is keeping track of your accounts receivable and whose time was paid. “Billing” is being sure that your clients are being billed reasonable amounts for reasonable services, and that you are putting in reasonable amounts of time on contingent fee cases in light of the amount of your hopeful recovery.
We have previously talked about many of these areas, but this week I would like to talk about “work in process recap.” Simply stated, each responsible lawyer gets a “work in process recap” on every case every month in our office. Remember, the responsible lawyer is the lawyer who is responsible for bringing the case in the office, and is totally responsible for everything in the case unless there is a specific agreement that someone else will take over some part of the responsibility for that case. These responsibilities include communication with the client, billing and collecting the fees. The responsible lawyer is the “captain of the ship.”
I have enclosed a copy of what one of the TABS3 detail “work in progress reports” looks like in our law firm. The client “Certified Business Systems, Inc.,” is an actual client that I own 100% of, and therefore, it is pretty easy for me to share this information with you.
Let me explain a few areas of this report that makes it very easy for you to see what is going on with each of your matters on a monthly basis.
The areas I want to talk about are as follows:
1. Date: One of these reports is done on every client for every matter every month.
2. Primary Timekeeper: This indicates the lawyer in the office who is the responsible lawyer for this particular client and this particular matter.
3. Client: Every client is assigned a number in our office. The capital “M” after the number indicates it is a monthly billable client as opposed to a contingent fee. If it were a contingent fee matter, we would have a capital “C” after the number.
4. Client Name: The client’s name shows up on every “work in process report.”
5. Contact: A person to contact on behalf of the client shows up on every “work-in-process report.”
6. Primary Timekeeper: This is also the responsible attorney.
7. Secondary Timekeeper: This is usually the person who is assigned as a second person on each matter. There is always a secondary timekeeper on every matter in our office.
8. Originating Timekeeper: This is usually also the person who is responsible for bringing the case in the office.
9. Category: These categories are as follows in our office and we do that so we can get information with regard to the various categories of legal business that we have in our office. Tabs3 also has a productivity report that comes out with a breakdown of all the various legal matters that you handle in your office by category. The categories we have available in our office are as follows:
A. Administration
B. Banking
C. Business
D. Collection
E. Corporate
F. Criminal
G. Domestic
H. Juvenile
I. Litigation B
J. Litigation C/Contingency
K. Personal
L. Probate
M. Real Estate
N. Tax
O. Estate Plan
P. Commercial Law
Q. Auto
R. Municipal
S. Bankruptcy
T. Employment
U. Securities
V. Intellectual Property
W. International
V. Environmental
Y. Healthcare
Z. Education
AA. General Representation
BB. Bonds
CC Pro Bono
DD. Traffic - DWI
10. Rate Code: We have in our office rate codes that are from one through six. Rate code one is our number one rate that we try to charge everybody. Rate number two is the rate we charge if we are going to give some type of a discount. Usually it is in the neighborhood of approximately ten percent discount. Rate number three is a more substantial discount and sometimes it is as much as twenty-five percent. This rate is usually reserved for relatives or special clients that you want to give a deeper discount to. Rate number four is almost a one-third discount, and we usually use that for not for profit matters. Rate number five is a forty percent discount, and frankly, we try to never use that. Rate number six is what we call an enhanced rate, and that is actually a rate that is greater than our number one rate and used for specialized cases. That rate is used where we have a contingent hourly rate, or where there is some special expertise of some kind that justifies a higher rate. Frankly, that rate is not used very often, but when it is appropriate we have no trouble whatsoever at all charging it.
11. Date Opened: The date the file is opened in your office.
12. Previous Balance: I think this is self explanatory in the sense that this is the amount of money owed on the bill prior to the “work-in-process report” that you are getting.
13. All of the time in our office is itemized by date, timekeeper, category, transaction code, a reference number, rate, hours, rate times hours giving an amount and a write up or write down and a description.
It is very easy for a client in getting an itemized bill to read down the itemization and be able to see a story being told about what work was actually done on their case over a given month.
14. Billable Total: This is self explanatory with regard to each lawyer. This is actually a subtotal.
15. Total Billable Fees: This is the total billable fees for all lawyers.
16. Expenses: All of the expenses are itemized on this bill on a monthly basis so you can see all of the expenses that were expended.
17. Total Expenses: This is the total of all expenses on a particular month.
18. Recap: All of the information in the recap is self explanatory once you understand what is happening with regard to all of the above information. It is a recap of all fees, expenses, advances, total work-in-process, previous balance, payments and credits, balance due, and a total.
19. A/R: Tabs3 also comes out with an account receivable recap on each client and each matter showing exactly what the outstanding amount is that is owed for a particular period of time.
20. The next category on the “work-in-process report” is total billed hours, fees, expenses, advances, finance charges and payments. This is all self explanatory. You can also see that there is a column on the right hand side showing total billed, billable, write off and non-billable, and these are all self explanatory as well.
21. Last Statement: This information tells you the date the last statement was sent.
22. Last Payment: This shows you the last time a payment was made.
23. Last Payment Amount: This shows you the amount of the last payment
Next week I am going to tell you about how these reports are utilized by everyone on a monthly basis. I think you will find the way that we use these reports very helpful to you. The total amount of time I spend reviewing these on a monthly basis is approximately an hour to two hours. I am sure you will agree that it is not much time to spend in order to have ongoing cash flow.
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.