The History of Timekeeping And What Law Firms Can Learn From It

Posted by Gaby Isturiz on Dec 10, 2015 3:41:27 PM


25637928_s.jpgSince attorneys started billing by the hour in the 1960s, time has been central to any conversation about billing. The need to keep time for hours worked has not changed, but the way that attorneys and law firms approach timekeeping has evolved dramatically over the years. In this post, we welcome Joe Bookman, foujoe_headshot_photo.jpgnder of PinHawk, who has taken an active role in the evolution of timekeeping, to give us a firsthand account of how things have changed.

In the late 1970s, I was a principal owner of a software company called CompInfo. We were hired to build a time and billing system for Skadden Arps: even then, Skadden was one of the largest law firms in the world. The software, named LawPack, was eventually implemented in 11 of the 50 largest firms in the US.

Skadden Arps had no system in place to run the firm like a business. They had hired a ‘Big 8’ accounting firm, Arthur Young, to write specs for a computer system that would help the firm run as a big business, which it was. At that time, in large law firms, the average period between when an attorney worked on a billable project, and when the client paid the invoice, was about 8 months. Skadden did better than most major firms but the long period between time worked and cash collected was not acceptable for a successful business.

What Causes Payment Delays

There were a number of reasons for this eight month lag, most of which pointed to an underlying cultural environment that was resistant to approaching firm operations like a large business enterprise. Most partners had little interest in keeping and submitting their own time or their associates’ time. Timekeeping and billing was more often than not considered a job for accounting. Attorneys keep written notes of how they spent their time (often on a calendar).

There was little discipline in keeping these daily logs. It wasn’t uncommon for an attorney to have to go back a few weeks in their records to find timekeeping figures. Time entries were often a “best guess” of the billing partner. Record keeping practices varied and were often rudimentary. It was the ultimate case of reconstructive time entry.

Revamping the System

One goal of the new accounting system was to reduce this eight month period to about three months. The savings in interest alone was significant, particularly for a large firm like Skadden. The firm needed a system that would give them management reporting capabilities and make it much easier to collect time and send bills every month. The concept of sending detailed monthly invoices to every client was not yet important to most large firms because clients were not demanding it.

IBM had just come out with their 4300 series of ‘small’ mainframes, which we used to develop the firmwide accounting system.

For many financial functions, the firm used VisiCalc which was soon replaced with Lotus 1-2-3. These spreadsheets are primitive compared to what is available today, but they were revolutionary tools in the early 1980’s. The ability to use spreadsheets for accounting-related activities led to many creative new applications. We didn’t have the type of time entry products that are on the market today. We used scanners to enter data from time sheets. Most attorneys had no desire to do their own timekeeping, and many didn’t even want a computer at their desk. Instead, time entry and related tasks were usually done by legal assistants and scanned by accounting.

It took CompInfo many years, working with several firms, to develop a system of timekeeping that would include attorneys in the process. When LawPack software was more widely used, we added an invoicing capability, which some large organizations were requiring from their law firms.

Wang and PCs Changed the Game

Firms were often not interested in using large standalone computers for accounting due to the need for additional hardware and technical staff. In the early 1980s, Wang Laboratories introduced the VS minicomputer to handle both their popular Wang word processing and third party accounting in one machine.

The Wang mini-computer supported “intelligent terminals,” which provided, for its time, ‘state-of-the-art’ word processing. For attorneys who were still not entering time, legal assistants could do it for them.

A major Wang VS selling point was integration of accounting and word processing. A system could produce a bill, which an attorney or legal assistant could reformat as needed before printing and sending. For the legal industry, as more clients were starting to demand billing details, this was a game changer. Later, WordPerfect and Microsoft Word, provided alternatives to Wang. Additionally, accounting vendors could choose to support multiple word processors.

The next evolutionary step was PCs and local area networks. Time and billing systems were migrated to smaller systems in the late 80s and early 90s, and the software became practical for smaller law firms.

As PC technology evolved, the focus shifted from hardware to software. By the late '80s software companies such as Juris, Elite Information Systems, Prolaw, CMS and few others started developing time entry and accounting systems for law firms. These systems were initially designed for accounting departments to perform billing and accounting functions, and legal assistants entered the time for the attorneys using these interfaces.

Attorneys, especially in large firms, rarely embraced these automation projects. There were some fears that these types of applications would uncover the firm’s productivity inefficiencies and, in turn, affect partners’ bonuses (not to mention their egos). Law firm culture wasn’t ready for that level of transparency and accountability.

Most recently time & billing vendors have made changes to the time entry interfaces to make them more appealing to the attorney to enter their own time. Despite these efforts, a significant number of attorneys still rely on the legal assistants to enter their time.

What We Can Learn From Timekeeping’s History

There are very important things we can learn from the history of timekeeping and its impact. First, hardware and software alone isn't going to drive a change. You need to have apps that engage and software as a service options that will benefit attorneys and make adoption appealing. 

The old timekeeping tools that firms have relied on for years are no longer enough. Those tools were designed for legal assistants, not for attorneys. Today, attorneys DO have their own computers and mobile devices, and CAN do their own timekeeping, but they’re still using the same old tools. This is creating inefficiencies, inaccuracies and a disconnect between time and billing, which effects law firm competitiveness and client trust.

Taking a system that worked 20 years ago and simply enhancing it is not the way to increase adoption and create change. Today’s solutions need to be built with attorneys in mind, rather than legal assistants.

Although the velocity to enter time and generate bills continues to gradually improve, still there is a long way to go in timekeeping efficiency, accuracy and transparency.

From PC to Cloud to Mobile and Wearables

The ability to access the firm’s systems from any place and any device is key. Cloud computing makes this possible, allowing attorneys to share their own timekeeping information, rather than having an assistant do it. Hours can be logged from anywhere, quickly and easily, via mobile devices. That information is then immediately accessible to the accounting department, for editing and processing as needed, before sending it on to the client. The result is more efficient timekeeping, more accurate billing, and a much shorter time between billing and collection.

Like many other fields, the legal profession has become mobile. Attorneys are constantly connected, allowing them to do more than ever before. The old systems were about complexity and detail: the more buttons and functions a tool had, the better. But an attorney doing their own timekeeping doesn’t have time for that kind of complexity. So the timekeeping tools that will win in today’s technological environment are the ones that provide diversity, but also simplicity: something an attorney can use on their phone, to note hours directly after a meeting, before moving on to the next one. This is the technology that’s going to bring timekeeping, finally, into the 21st century.

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Topics: Time Entry/Time Keeping