UPDATE to Study Finds Solo Lawyers Bill Only Two Hours A Day
You know the saying, “ask and ye shall receive?” It really works! In yesterday’s post Study Finds Solo Lawyers Bill Only Two Hours A Day, I questioned the results of a “Legal Trends Study” announced at the recent Clio Cloud Conference that showed that solos use only a tiny fraction of the workday for work (2 hours) and of that time, spend 1.76 hours on billable work and only collect 1.6 hours of the time billed. I acknowledged that the full report had not yet been released and therefore, I might be “jumping the gun” with my criticisms but I felt that the issues that the story raised – how we use data and the importance of context – were important enough to start a dialogue.
And indeed, that’s what I’ve done. Since my post, I’ve received some positive feedback as well as some criticism from Clio officials on Twitter for errors in the post. Since some of these points are accurate, I wanted to update the post to make some clarifications. At the same time, I don’t apologize for it. As Carl Sagan said (h/t to a Solosez reader), “extraordinary claims require extraordinary evidence.” In other words, when a company, with great fanfare announces blockbuster results based on a data-driven study, it should be prepared to show the supporting data or risk a situation where someone might actually take issue with it.
That said, here are my clarifications:
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I did not listen to Jack Newton’s keynote speech announcing the results of the study because it was not online at the time. Instead, I relied on an ABA Journal article and Law Talk Network podcast with two Clio officials – both of which referenced the highlights of the talk.
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I did not contact anyone at Clio prior to writing my post because that’s not how I operate at MyShingle – I blog about many products and services and like many bloggers, rely on existing and credible news reports as my sources. In this case, I relied on stories from the ABA Journal and an interview with Clio officials, so it’s not as if my coverage was one-sided. That said, my blog is always open and those who don’t agree with posts are welcome to comment or submit a counter-post for publication.
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Although the Clio keynote speech still wasn’t online as of last evening (according to a Twitter exchange), a colleague of mine who had taped the keynote shared the link which I’ve since watched.
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After reviewing the keynote, I see that my claim that Clio “failed to that the low number of billable hours might have resulted from lack of work as well as inefficiencies” was incorrect. Although the media discussed only the inefficiency factor, Jack’s keynote did make clear that both factors (inefficiency and lack of work) account for the small fraction of billables.
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Several commenters to my post suggested that the Clio data was skewed because it did not account for flat fee arrangements where many lawyers enter “one” hour into Clio (for one flat fee task) or don’t run flat fee invoices through the system. On Twitter, @JoshuaLenon, Clio’s lawyer in residence explained that the the data segregated between flat fees and billable hour matters.
As cloud-based systems amass more data, we will see these kinds of “data-driven trend reports” issue more frequently – and that data can play an important role shaping our firms, selecting practice areas or identifying potential client markets. My only point is that before relying on these numbers, we should understand the data and methodology behind them.
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I don’t understand what Joshua means by the data segregated between flat fee matters and billable hours matters. It would help to have that explanation, because otherwise the report highlights seem very flawed.
My point in my comment to your earlier post was that focusing on billable hours as the sole measure of efficiency and utilization ignores a significant element of how I and many other lawyers bill – on a flat fee basis. I may spend 5 minutes adapting a document I charge $1000 for, because that’s what the document is worth. So there’s no way to really adapt that billing to a billable hours context. I can’t enter 5 minutes times $250 – that would grossly undercharge. I can’t enter 4 hours at $250, because that would look like I’m padding my billing. And if I can do 3 of these $1000 documents, spending only 15-20 minutes on it, isn’t that a mark of high efficiency, rather than low efficiency? I’m making $3000 in the same time that I could earn only $65 if I billed by the hour.
I agree with you Paul – that’s exactly my point. Billable hours worked are not a good metric of efficiency.
My question is this – why would I want to buy anything from a company who is basically claiming I’m completely inept and can’t seem to track a billable hour?
And to jump on the point Mr. Spitz made – how well does this company know me if they haven’t figured out and accounted for the fact that ALL my billing is flat fee?
Right now this is the LAST company I want to buy a product from.
As a CLIO user, I think I have a grasp on where the metrics come from. As of a few upgrades ago, matters can be denominated as flat fee, hourly, etc. However, the system was not that way when it started years ago and many older users still use an hourly entry model of 1 hour for a fee as their input model (1 hour being equal to the flat fee rate). Moreover, many older users don’t use the time category designations at all. Furthermore, there is no way for the metrics to keep track of contingency fee matters, which often take up a lot of solo practitioner’s time and are not entered in CLIO at all. Unless there is a possibility for attorneys’ fees, most attorneys I know do not track their time in contingent fee cases. While it may be a good practice to track such time, it is also a huge time suck.
Hi Sandy—I want to take the opportunity to clarify that we’re certainly not claiming ANY lawyers are inept or incapable of tracking a billable hour; we’re simply trying to use the data available to us to derive insight and identify areas of improvement in law—both for ourselves and for our customers. No slight is intended on our part.
In regards to the segmentation between flat fee / hourly billing, we’ll explain our methodology when the actual report is published—hopefully that will clarify. If not, we’re happy to discuss further.
Lastly, if you don’t want to buy anything from us, that’s certainly fine. The intent of the Legal Trends Report isn’t to sell more Clio subscriptions or earn US more money, it’s to do what we can to help our customers and the solo/small firm ecosystem as a whole, and we certainly believe that by working together, we’ll be able to accomplish this.
I appreciate and welcome all criticism, and it will help us refine the report and allow us to identify areas where we aren’t communicating things as clearly as we would like. Please, keep sharing the comments either here or by reaching out to me directly at derek.bolen@clio.com.
Yeah, if they’re relying on me to code matters as flat fees in their system, I stopped doing that. I think when I went through their phone training I was even trained differently. I forget why but marking things down as flat fees screwed up the accounting within clio. I instead take a retainer, credit it to the client, and bill activities, which is sort of like an expense rather than a unit of time, against the retainer. I think if it’s flat fee clio requires it to be earned on receipt, rather than disbursed per milestones, which is what I do and my bar sort of requires.
Also, I love that extraordinary claims requires extraordinary evidence quote. Always glad to see that one.
I thought your initial article was fair.
So I just browsed the report, which is out now, and I saw virtually no acknowledgement that lawyers are doing flat fee or contingency work. All the discussion and analysis was based on billable hours.
Yes. I did not find that the report contained much explanation of any of the information in it. The report does say that flat fee matters were segregated out, but even so, that does not account for the possibility that some lawyers may handle both flat fees and hourly – and in fact, those who are doing flat fees most of the time will likely have lower billables. So while I remain skeptical of the 2 hours per day, I do believe that lawyers probably do bill far, far less than is reported. The question is the reason for the low billables and whether it’s cause for alarm.