How Can Law Firms Increase Chargeable Hours?

OutSec Blog How Can Law Firms Increase Profitability Via Chargeable Hours image Vector Illustration Of A Lawyer Sitting With Laptop On Hourglass

RBS’ Legal Benchmarking Report from 2019 stated that on average, a full-time solicitor attains 1,000 chargeable hours per annum. Whilst the average had not increased year on year, a report in The Guardian seemed to suggest that lawyers were working increased hours often outside of office hours (and increasingly at weekends). This year, it is clear from Macintyre Hudson’s Legal Benchmarking Report for 2022 they believe income generation can be improved by removing administrative tasks (such as typing) from fee earners in order to increase income generation. There is a correlation here between solicitors working increasing hours and the administrative tasks they undertake. So, the question on the mind of all managing partners and practice managers is: how can we increase those elusive chargeable hours and provide better support?

Setting Realistic Chargeable Hour Goals

The first point to make is that chargeable hour goals do have to be a realistic target that fee earners can meet. You may have seen an article earlier from The Guardian entitled: “‘Toxic, cut-throat’: the work culture awaiting junior lawyers”. In that article, it was suggested that in some law firms, if junior solicitors were not meeting high targets, managers piled on increased pressure, suggesting staff worked outside of office hours to meet those goals. The implications of setting unrealistic chargeable hours clearly harm your practice, but also the legal profession as a whole.

Productivity: Taking It Back To Basics

The questions that most fee earners forget to ask themselves are:

  1. How much will it cost my firm in chargeable time if I do a certain task?
  2. Will it be more cost-effective for someone at a lower grade to do the task (e.g. a lower graded solicitor or support colleague).

Giving thought to these two questions is fundamental to ensuring that fee earners can be as productive and cost-effective as they can be within office time. This is especially true if the said action results in tasks being undertaken that the firm cannot charge for, or that a court may reduce on assessment.

Providing Sufficient Support

In most cases, productivity comes down to ensuring your firm has the necessary support in place to do tasks at less cost, thereby allowing fee earners to be more productive.

We think there is not a fee earner practising today who has not spent time at a photocopier at some stage of their career. If you have solicitors standing at photocopiers is this a good use of their time?

Taking Court rates for Solicitors in London, how much does it cost your law firm in chargeable time, if a solicitor stands at a photocopier for ten minutes

Solicitors Rate per hour as per government guidelines Cost for 10 minutes photocopying
Grade A Solicitor (London) £409 £68.16
Grade B Solicitor (London) £296 £49.33
Grade C Solicitor (London) £226 £37.66
Grade D Solicitor (London) £138 £23.00

It is simple tasks like these that appear on the surface to be an insignificant use of time, but time does means money.

If you were to compare the cost of having a member of your admin staff doing the same task, it would cost your firm £1.50. Meaning a fee earner stood at a photocopier, has lost your firm anything from £66.66 to £21.55 in just 10 minutes!

These small amounts soon mount up in lost chargeable time over the course of a year. As the old saying goes: “If you look after the pennies, the pounds will look after themselves”.

Macintyre Hudson’s Legal Benchmarking Report for 2022 gave three key action points for law firms in 2022 in terms of income generation, one of their action points being:

Generate chargeable time capacity for your fee earners by removing administrative tasks from them.

This is something we have been saying for quite some time at OutSec, and it is great to see this has finally been put in black and white in a benchmarking report. Fee earners are there to generate income, admin staff are there to do the administration.

Questions To Ask Yourself

  • Do you have sufficient administrative support to do these tasks?
  • If so, is the administration system in place at present, working effectively and efficiently?

Generally, it comes down to one of the above points. If you have sufficient support in place, perhaps you need to review your procedures to make them more efficient to meet your firm’s needs.

Dictation Is More Cost-Effective Than Typing Your Own Documents

With the advent of the computer, law firms sought to reduce secretarial and typing staff believing that this was more cost-effective for their firms. But did you know that dictation is more cost-effective than typing?

The simple fact is that we can all speak considerably faster than anyone can physically type. The following stats speak for themselves:

“The average person types between 38 and 40 words per minute”.

A “good rate of speech ranges between 140 -160 words per minute.

This means that dictation is four times faster than typing your own documents, meaning that two hours of typing could be dictated in only 30 minutes.

Furthermore, a recent report from The Lawyer: “Microsoft Word in Law Firms” suggested that “42% of solicitors said ‘their lack of Microsoft Word skills delayed responses to clients’.” This has further ramifications for productivity here. In the report, David Lee, IT Director at Womble Bond Dickinson states:

“If you have a lawyer typing their own documents, taking longer than necessary, due to an insufficient understanding of the Word environment, it will naturally take longer to produce and therefore delay the time it takes to respond to the client. This can be unhelpful and isn’t the best use of the lawyer’s time.”

This is beside the fact that typing their own documents in the first place, is not an efficient use of a fee earner’s time.

So I Save Costs Just By Dictating?

Yes. So, for example, if you have a fee earner who spends two hours a day typing their own emails/documents, they are losing out effectively on one and a half hours in chargeable time. This time could be put to be better used elsewhere: either to increase efficiency (and increase those chargeable hours) or allow fee earners to release valuable WIP and lock up.

Calculation

So let’s take an example of a grade A solicitor (using London rates). We would work this out as:

(a) Grade A solicitor’s lost time: £409 per hour x 1.5 hours = £613.50

(b) Less OutSec’s cost for transcribing 30 minutes of dictation: £1.20 x 30 = £36 plus VAT (£7.20) = £43.20

If you take (a) from (b) this gives you the cost of the lost chargeable time.

Answer

Therefore, the amount of money lost by a Grade A solicitor in London by typing his own documents is £570.30.

Using the same calculations for grades B, C and D solicitors in London:

• A grade B solicitor would lose £400.80;

• A grade C solicitor would lose £295.80; and

• A grade D solicitor would lose £163.80.

In an age where law firms need to be more efficient and cost-effective, this is a big deal. Even more so, if this is occurring daily. Over the course of a year, this can represent a huge loss for law firms coming from a single fee earner.

The more fee earners you have typing their own documents and emails, the more money your practice is losing.

So How Much Can I Gain?

Why not download our cost calculator here.

All you need to add is your chargeable hour rate and how many minutes approximately you spend transcribing your own documents daily.

The cost calculator will show how much money you could gain annually from dictating, as opposed to typing. (The cost savings are shown after deducting OutSec’s costs for transcription at our standard rate).

We think you will be surprised by the results. So why not give it a go and increase those chargeable hours!!

Our Firm Uses A Case Management System

Whilst case management systems allow you to do some automated tasks, there will always be scenarios when using a transcription resource to do some of these tasks will be more cost-effective than a fee earner doing these. As shown above, a five or ten-minute job can start to run into hours which mean that fee earners are not practising law – but doing admin task.

There will always be tasks which, at the moment, automated systems cannot do such as bespoke:

  • file notes/attendance notes
  • letters
  • emails

These all will happen during the life of a case. Then you have to take into account any documents which a case management system may generate that then needs a lot of reworking. Having fee earners doing such tasks is simply losing your practice money.

Conclusion

In conclusion, remember to strip everything back to the basics. If you have a fee earner who is not meeting their chargeable hours, look at the potential causes.

  • Do you have sufficient support mechanisms in place?
  • Remember to ask those two important questions:
  • How much will it cost my firm in chargeable time if I do something?
  • Can someone else do the task and will it be more cost-effective for someone else to do it?

If you are wanting your fee earners to achieve those chargeable hour goals, dictation is one area I think all law practices should look at.

Firstly, it is more cost-effective than a fee earner typing their own documents.

Secondly, it may mean your lawyers do not have to stay late (or work at weekends) to meet their chargeable hours’ targets as it is reducing their admin.

Thirdly, it may result in lawyers feeling less stressed and less pressurised at work. It reduces time spent on transcription which can be better used elsewhere.

This simple change could be an easy win, win scenario for all.

About OutSec the UK’s Leading Online Transcription Company

OutSec is the UK’s leading online transcription company whose business has grown substantially since 2002. We are one of the most successful transcription companies in the United Kingdom. We are both ISO27001 and Cyber Essentials certified.

If information, data security and confidentiality are important to you, do not just cross your fingers when outsourcing transcription to meet your typing needs.

Therefore, if you are agreeing a contract that deals with sensitive data, demand ISO 27001 and Cyber Essentials compliance. They are more than logos! These information security standards set the bar high. It takes constant review, challenge and action to receive and retain them. They also provide assurances that OutSec is indeed GDPR compliant.

So What Are The Benefits For Your Practice?

Sole Practitioners/Barristers/Small Law Practices

OutSec is the perfect solution for sole practitioners, small law firms or barristers who need typing assistance on a pay-as-you-go basis, as it provides a cheaper alternative to employment.

Medium to Large Law Practices

Medium to large law firms use OutSec to:

  • Reduce secretarial staff (completely or partially). This reduces the need for expensive office space (or enables space to be utilised for more productive use/fee generation);
  • Allow fee earners to concentrate on chargeable hour targets, rather than typing emails or amending documents;
  • Provide an effective solution to enable your fee earning staff to work remotely. Thus providing further opportunities to reduce expensive office space or increase your fee earner headcount with less space. It enables flexible working and makes law firms more agile;
  • Provide a business continuity solution to enable law firms to access secretarial staff in times of absence.
  • Enable firms to upscale support as the firm grows or at times of high workloads, without the need for employing additional staff.

OutSec’s Legal Division

Our Legal Division has specialist qualified transcriptionists (with over 10 years’ experience) to meet all your law firm’s needs. That is why OutSec is an industry leader in legal transcription.

With OutSec there is no minimum spend. Accounts are free to open. There are no monthly fees or hidden charges. You are charged on a per-minute basis (rounded up to the nearest minute). Why not open an account today and start increasing your firm’s chargeable hours? What do you have to lose?

You can contact Mark Hope (the author) on 020 8123 3422 (direct dial).  Or alternatively on 020 7112 7527 (Head Office) or visit our website at www.outsec.co.uk.