The maxim says “Failing to plan is planning to fail!” Yet how many of us consciously plan our matters?
Clients ask us how much a matter will cost. And in effect we guess! The big danger in that approach is that we have a great tendency to under-estimate.
If asked how long it takes to boil an egg, we instinctively say 3-4 minutes. We forget that we have to heat up the water and that takes time. We forget that we might have to clean out the pan first. We forget that we might need to go down to the shops to buy an egg etc etc.
On matters, we tend to forget that staff need to be briefed, work sometimes needs to be re-worked, that clients take longer to take decisions and that advice from specialists requires us to redraft clauses in contracts etc
By producing a matter plan in which we itemise the tasks, we can minimise the risks of under-estimating. Furthermore, by assigning responsibilities to the tasks (ie trainee does this, senior associate to do that etc) we can produce more accurate costings.
We finish the job, look at the costs and think “gosh – that looks expensive!” So we discount, probably not realising that 10% off the bill produces a decrease of 30% off the profit.
When estimating, how often do we look to see how much similar matters have cost in the past? The big problem with historical data of course is that people record how long a job should have taken rather than how long it actually did take.
Moral editing! We tend to record value not cost. For management information reasons, it’s very important to record cost.
Is it really worth measuring matter profitability? Maybe not to levels of net profit because of the endless arguments about how to apportion overheads? Some practice groups will quibble that they don’t use the library or meeting rooms! But it can be very helpful to measure matter profitability to gross profit levels. It is better to be roughly right than precisely wrong!
It might sound pretty unexciting and basic, but most firms would get their biggest return on investment from any training course if they offered training in time recording.
Content of such a course could include reviewing how to book for several activities, eg:
- A new problem arises which requires you to spend 3 hours researching
- Same problem arises later, which you can now do in 5 minutes
- Travelling to one client while working for another
- Fee earner from another department asks for your help for 30 minutes on a matter
- Trainee from your own department asks for help on a general point of procedure
All in all, a large number of situations in which valuable income is potentially being lost – Hence, the need to find ways of plugging the leaking sieve!