Revenue has historically been used as the metric for measuring timekeeping performance. However, when you take a step back, that does not actually make too much sense.
When it comes to performance strictly on a results-only basis, you forget the mitigating factors. Consider your drive to work, for example. During the summer holidays on a dry day, you’re likely to be a lot faster than you are during term time where there is more traffic, or in the wet when drivers on the road are slower.
The fact is, performance comparisons are only valid in isolation when conditions are the same.
Firm revenue has been seen for a long time as the right way to measure timekeeping performance. Typically a calculation is made using the number of timekeepers multiplied by their respective rates. A total is arrived at. This is then used to benchmark the performance of a timekeeping solution. If the net revenue goes up, the solution works; if it goes down, then it doesn’t.
Going forward the same metric is applied to gauge performance year-on-year, or when a new timekeeping element is added. The bigger the revenue, the better the timekeeping performance, right? But on analysis, that doesn’t really stand up.
Firm revenue is also the result of a large number of variables. There are external factors such as the economic and regulatory climate, which will influence how much business a firm handles. Maybe the economy is booming so you’re very busy. Maybe it isn’t, so you’re not. It’s nothing to do with timekeeping.
Similarly, there are internal factors. Perhaps the firm has upset a big client and they’ve found alternative legal representation. Or perhaps the firm’s work is delighting clients, who are pushing more and more business your way and more timekeepers are hired. Again, nothing to do with timekeeping performance.
Across the board, in fact, there is no actual correlation between firm revenue and timekeeping performance. So there ought to be a better and easier way to measure it – and fortunately there is.
The starting point has to be a measure that isolates timekeeping performance from other contaminating factors. That’s why revenue is not good as a standalone metric without further context. As noted above, too many other elements corrupt the result.
In addition, timekeeping should be measured in a way which actually reflects the amount of value delivered. So it’s not sufficient to look only at quantity of time, i.e. hours, it’s also about quality.
This is why velocity – a metric first introduced in the early 2000s by Peter Zver when developing a best-of-breed timekeeping system called TimeKM – is the critical thing to measure.
Velocity is the single number which reflects how quickly work is being captured in a system after the work event. If I do the work on Monday and record it on Friday, this equals a velocity of 4. If I do the work on Monday and capture the time instantly, the velocity is zero. In fact, velocity is very diagnostic because it is a simple and precise reflection of reality.
It follows that high velocity is bad because no one can remember with complete accuracy all the things that they did many days ago, especially if they’re under pressure. By Friday, what an attorney did on Monday is inevitably something they’ll have to piece together. Maybe with notes, a calendar and some emails to go on. Or maybe they just recall spending all afternoon on one piece of work. But that might be a distortion of reality.
The point is that for the firm it results in leaked time. Some of it in small increments and some in big chunks: an attorney speaks to the client in an airport lounge for twenty minutes but by the time they get off the plane and head home, it’s completely forgotten. This typically happens outside of the office and outside office hours.
The solution to leaked time is to achieve zero, or near zero velocity by adopting systems which enable very quick, easy, painless, contemporaneous and mobile time recording. Such systems allow time to be entered in increments which previously seemed too small to justify the effort. But even more significantly, they have the power to completely flip leaked time into “new found time”, which is really impactful.
The way forward
Firms need to emphasize that low velocity equates to high quality, which really matters because of its large impact on both realization and trust. Realization is something attorney’s should really care about because who wants to work for nothing? Yet inaccuracy, vagueness and padding creep in when velocities are high, giving clients more opportunity to question their bills and right them down.
Meanwhile, perception of value is like a bottle of milk left in the sun: it spoils quickly. Clients are pleased and happy the day a dispute is resolved, a merger safely delivered, or a claim settled – but two months later, those emotions have dissipated. So your very slow bill becomes one they feel more inclined to scrutinize and query. The longer it takes to submit time and thereafter produce a high-quality invoice, the higher the likelihood that the realization will go down.
Hand in hand, inaccurate bills and unclear line items also erode the client’s confidence and trust in the firm. Which is serious. An established track-record of immaculately presented and prompt invoices will better position you come panel review time. You’ll look like a firm that delivers consistency and accuracy, and with whom clients can confidently collaborate. Meanwhile slow, poor-quality invoices may make a client wonder if it’s getting slow, poor quality counsel.
Finally, firms need to be clear that velocity is the metric which reflects true timekeeping performance and gauges the value of time inventory. Yes, revenue and hours still matter to the firm. But the salient point is that they are business metrics, not timekeeping ones. It’s a flawed equation if these are the measures used to evaluate timekeeping performance.
Click here to learn more about Advanced’s time recording and capture software, Carpe Diem.