July/August 2019

Practice Management Advice

Smart Growth: Monitoring Productivity

John D. Bowers

You’ve felt it before: that sinking feeling when your star performer all but crawls through your office door after another long night of waging legal battles and puts you on notice of a long weekend beginning tomorrow. If you don’t recognize the rumpled 3-day-old outfit, you can’t miss the nonverbal cues that say your only option is to encourage the time off while simultaneously figuring out just how to cover the much-needed absence.

Moments such as these are quintessentially the wrong time to jump into a hiring decision. Like running to the grocery store for “a few items” when you haven’t eaten in six hours, what should be a reasonable process is sure to turn into a fiasco of decision making fueled by one emotion: desperation. By this time, it’s simply too late.

On the other hand, we’ve all worked with people who send up the red flag the moment they complete their first eight-billable-hour day. But with whose word do you run? The rock star talent who is totally spent, the inconvenienced paralegal who usually leaves at 4:10 p.m. or your lawyer who daily celebrates the New York Times crossword puzzle? The answer: none of the above.

Counting the Cards

Get ahead of the hiring conversation by monitoring leverage. Simple monthly tracking of activity metrics, including billable hours entered and fees billed, won’t lie. Six months or more of this activity data reveals the consistency of utilization, which will replace your reliance on how busy timekeepers claim to be.

Do you have senior people gobbling vast amounts of work? Welcome to the reign of the Baby Boomers! Do you have mid-career timekeepers washed under with work while other long-time employees must be doing something? Before applying the wrecking ball to the apparently condemnable neighborhood, informally survey the neighbors and then dig a little deeper on the numbers. Yes, this is still not the time for action.

To be clear, the numbers you’ve gleaned so far are not productivity metrics since the simple act of entering time or sending a million-dollar invoice are both merely aspirational in nature: revenue in the door alone matters. Thus you must temper the activity data with productivity metrics. After all, if attorneys howling for help enter $70,000 of billable fees in a given month but only $50,000 actually makes it out of work in process onto client invoices, you’re looking at a paltry billing realization of around 71 percent. You’ve located a communication breakdown that should be worked out before hiring. The same applies to the knee-jerk discounts to which we so readily agree.

Further, if your clients are challenging the bills in our scenario and consistently paying $45,000 on each invoice, which is a 90 percent collection realization rate, you must still refrain from posting the want ad since the total realization rate for that client is only 64 percent of time entered.

Since you’re now a pro at monitoring productivity and can identify six months’ worth of 90 percent or more total realization for a timekeeper who is regularly putting in 25 percent above their monthly productivity expectations (billable hours or other metrics), you still must decipher whether work can be reassigned.

Substitution

Hard data may reveal pockets of work that should be reassigned to underutilized timekeepers. Every lawyer I’ve met does their legal work better than anyone ... on the planet. As a matter of self-worth, they are true believers, so reassigning work may become an intensely personal project. This is what you get paid for: like the meticulous brain surgeon you are, snap on your rubber gloves, be ready for a mess and shift the work in a way that serves the client well and leaves fragile egos intact.

It may be that the nature of work that could be reassigned doesn’t match up to the skills your other timekeepers, who have capacity, possess. There are any number of other reasons why a reassignment won’t work. Whatever reason you uncover, hiring should be treated as an option to grow following careful due diligence. We’ll discuss related tactics in later columns, but too often smart growth is obviated by the bird in the hand.

Nothing Risked, Nothing Gained

If your practice is no longer struggling to simply subsist, you likely have decided that a comfortable, slack-jawed stupor may be no way to practice law. But the risk of making a bad hire and surrendering profit margins continues to paralyze your hiring conversations.

Consider then the opportunity cost of doing nothing. The threshold for star performance may be a staffer or a team of timekeepers individually billing either 2,400 hours on average or collecting over $1 million a year. There is no question that burnout and incapacitation by other causes plague the legal profession. Risking the loss of top performers is more than enough to justify your measured approach to monitor productivity. 

John D. Bowers

John D. Bowers is the chief operating officer at Patterson Intellectual Property Law, PC, in Nashville, Tennessee. He also serves as executive director of the Tennessee Intellectual Property Law Association, is the treasurer of the Middle Tennessee Chapter of the Association of Legal Administrators and is a former editor-in-chief of Law Practice and continues to serve on its editorial board. JDB@iplawgroup.com

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