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Tech Can Help Recover Thousands Lost to Law Firm Inefficiencies

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By Casey C. Sullivan, Esq. on July 25, 2016 1:57 PM

Law firm inefficiencies don't just make legal work slower and more cumbersome, they also rob lawyers of income. Firms constantly write down hours for tasks that were spent inefficiently, reducing client bills for work that took too long to complete and taking potential income away from attorneys.

Just how much money do such write-downs cost? Tens of thousands of dollars per lawyer, per year, according to a new study by the Thomson Reuters Legal Executive Institute.

Inefficient Workflow = Reduced Cash Flow

The study by the Thomson Reuters Legal Executive Institute sought to identify just how many hours were written off by the average attorney. (Disclosure: Thomson Reuters is FindLaw's parent company.) Those write-downs "are often a recognition that too many hours were spent producing the work product," LEI Senior Legal Industry Analyst William Josten writes in Legaltech News today. As such, they're a fair approximation of the cost of inefficient workflows.

And those inefficiencies can be quite expensive, according to Josten. The Legal Executive Institute surveyed attorneys and found that the "leading culprit" behind write-downs was time spent researching legal questions, or "getting up to speed."

Junior associates wrote off 23 hours of "getting up to speed" time a year, according to the survey. At an average billing rate of $312 an hour, that's a total cost of $7,200 per associate per year in written down fees.

And those higher up wrote down even more. Senior associates and partners both wrote down 28 hours spent researching annually, according to Josten. That's an average loss of $10,780 per senior associate and $15,000 per partner.

When you include hours never even entered into billing systems, or so called "silent write-downs," the numbers grow even more. Junior associates spent 61 unreported getting-up-to-speed hours per year, or over $19,000 in lost fees. Senior associates spent 18.5 hours, for $7,100 lost, and partners spent 31 hours, at $16,000 per partner.

Put these numbers together and the average firm is losing, on average, between $26,200 per junior associate per year and $31,000 per partner, due to inefficiencies.

Tech to the Rescue?

Josten posits that a bit of investment in technology could help reduce those lost hours, significantly:

Adopting technology that could help an attorney get up to speed even 20 percent faster would mean that the average partner could convert six of her current "silent write-down" hours into potentially productive use. Six hours, billed to a client at an average rate of $560, translates to $3,360 in additional fees billed per partner per year. A small savings in hours, quantified as potential dollars of revenue, multiplied by each partner in the firm, equally a tidy sum.

So, if you're still doing things the old fashioned way, now might be the time to tech up. You could go big, hiring an army of AI robot lawyers, or start smaller, adopting some simple new software to help speed up your workflow. After all, just a small investment in improved law firm efficiency could save you thousands of dollars.

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