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Timeless Contingencies
"Don’t waste your breath. I handle only PI cases on a
contingent fee basis. Why would I need a time and billing
system. I never have receivables. If I get paid, it’s without
regard to my time. If I don’t get paid, it’s because I lost
the case. Timekeeping is one more headache I don’t need."
If the above is true, then I don’t have anything to write
about. Right? If you subscribe to the above idea, fine. You’re
excused. Go out and play until dinner time. Oh . . . and make
sure your professional liability insurance is paid up.
What’s this? Another message!
"Dear Committy to hear complantes about lawyers:
Last year, I sued the guy who hit me with his car and
injerd me. I kept calling my lawyer larry loopy to find out
how my case was coming, but he was never in or didn’t have
time to anser me. He made me setle with the ins. Company by
saying it was the best deal but i know other injerd people who
got a lot more for less injerys. I don’t think my lawyer gave
a squatt about my case. My frends say he probabely maid a tel
call to the ins. Co. and took their 1st ofer. Wood
you plese look into this mater for me. Thnkx.
Sinseerly,
marvin m. malingerer
Uh oh. Must be misdirected email. I’ll just forward it to
the committee. I sure hope that poor sucker kept his time.
. . . .
It would seem obvious that keeping track of what you do,
and how much work it involves, is a no-brainer. Yet I would
bet that the majority of solo and small firm personal injury
attorneys don’t even know what a time sheet looks like.
Larger firms are often much more diligent about such
details. The law of averages says that if enough personal
injury attorneys get together, one is bound to have some
business sense. This is also true in firms where the personal
injury lawyers are just a department in a much larger
"factory."
Some firms are very diligent about keeping time . . . for
everything but their contingency cases. This is where you
might find a senior partner who is puzzled about the fact that
the firm is not very profitable, even though they charge a
minimum of $150 per hour for their transactional work. If they
had time records for their contingency cases, they might find
that a whole department of talented lawyers are (is?) working
for about $25 per hour.
If a substantial part of an attorney’s practice is
contingent fee work, it might be an interesting exercise to
"guesstimate" how much time was spent on a given case, then
divide that into the fee to determine the effective
hourly rate.
As a consultant, I often hear, "There isn’t a time and
billing program on earth that is designed to handle
contingency fees."
That’s not exactly true, but the issue is a "red herring."
Most producers of time and billing programs include very
specific instructions on how to handle contingency fees.
Software Technologies, Inc.’s TABS III is typical. You are
told to use a "No fees" format when billing contingent fee
clients. This enables you to recover your advances as they are
incurred, without mixing in billable time. It is also possible
to hold both time and expenses, (and advances), until the case
is concluded. At that time, you can use the program’s write-up
or write-down feature to produce an accurate bill reflecting
your share of the judgement or settlement. Alternatively, you
can set a flat fee for the matter, which has the same effect.
If expenses and advances weren’t billed as incurred, they can
be reflected as a separate subtotal on the bill to determine
how much of the judgement over and above the contingent fee
amount should be withheld.
(Note: It is important to account for expenses and advances
separately for tax purposes, since reimbursable amounts don’t
have to be declared as income, while recovered expenses are
often profit centers).
Sage U.S., Inc.’s Timeslips Deluxe and Timeslips, Ver. 9
both provide for the calculation of contingent fees after a
judgement is rendered. If either time or expenses, or both,
were "held" pending judgement, the "hold" can be removed
automatically as soon as the contingent fee is calculated.
(This avoids the problem of having a lot of "work in process"
hidden somewhere in the system because it was never posted to
accounts receivable).
Why is it so difficult to convince attorneys that they
should keep time on contingent fee matters? As with life
insurance, timekeeping on contingent fee matters is designed,
in part, to cover the relatively rare instances where it is
needed.
From a business point of view, it is often regarded as
unnecessary in a solo or small firm setting. After all, if an
attorney handles nothing but contingent fee cases, yet is
starving to death, he or she doesn’t need a computer program
to figure out why.
There is one more reason for using a time and billing
program on a contingent fee matter: It is a means of keeping
track of expenses incurred and advances made in the course of
the case. Even if the lawyer doesn’t record his or her time,
but does track expenses and advances, the "bill" can serve as
a settlement sheet when reimbursement time rolls around.
If you handle mostly contingent fee matters, but don’t
record your time, this last point will enable you to "cost
justify" the purchase of a time and billing system. Once
implemented for the narrow purpose of producing a settlement
sheet, it is just a short hop, skip, and jump to covering your
you-know-what, and tracking your productivity.
Timekeeping on contingent fee matters? Computers make it
easy, and smart attorneys do it. (Hey! Maybe that’s why "the
rich get richer.")
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