If you've ever taken an economics class, one of the first things that you learned was the concept of "opportunity cost": a dollar you spend on one thing is a dollar you don't have available for something else. The same is true, of course, of time. And time, as they say, is money. So when you spend an hour on non-billable work, you're foregoing the money you could have billed during that time.
This is an issue for many attorneys, especially those who work as sole practitioners or partners in a very small practice. A constant tension exists between the need to earn more money and the desire not to spend money paying someone else to do things you could do yourself, for free.
A Clio study referenced in the ABA Journal found that sole practitioners are only billing 2.28 hours per 8 hour day worked. Taking into account that not every billable hour is actually paid (as most solos know, to their great sorrow), it's easy to see why solos and small firms often struggle — and want to decrease the amount of non-billable work they do.
Continuing legal education, networking, and marketing are all non-billable activities, but they can all be valuable and ultimately lead to more billable hours. It may be helpful to pay attention to what exactly you're doing with your non-billable time.
If you're spending time at weekly networking groups like local bar association, BNI and Chamber of Commerce gatherings that are directing clients your way, that's probably a worthwhile use of your non-billable hours. Similarly, CLE events not only increase your skill and marketability, but can serve as useful networking events.
You may find yourself asked to speak on a panel or write an article for a publication. These activities can serve as a way to increase your name recognition and credibility, and be a feather in your cap. However, like a musician who is offered the opportunity to play an uncompensated gig "for the exposure," you need to consider whether the time you devote to these activities, including preparation, is taking away from your ability to accept paying clients.
Then there are errands and administrative duties that are necessary to the function of your practice, but which don't lead to increased business and billable hours. To the extent possible, these are the activities you need to reduce or eliminate. There are two primary ways to accomplish this: outsource them, or become more efficient.
It may seem frivolous to pay someone else to do something you're capable of, especially when you're watching the bottom line. And doing everything yourself can be a hard habit to break if you started a practice from scratch and actually, at one point, had the available time to do it all. But if you could pay someone to perform a task, and what you're paying them is less than you would earn in the time you'd save, then spending that money is an investment in your own profitability. Billing is an excellent example.
For most sole practitioners with whom The Modern Firm works, billing is a hated but necessary chore. It takes hours, during which the attorney cannot focus on billable work. And billing must be done regularly regardless of what other matters are pressing for attention.
If an attorney bills at $250 per hour, and pays a contract or part-time assistant $25 per hour, it stands to reason that, if the attorney can bill just one or two additional hours of work while her assistant is handling the billing, it's a net gain for the attorney. Bonuses include the fact that an efficient assistant can often complete the task in fewer hours than it would have taken the attorney, and the attorney doesn't have to set her hand to a task she doesn't enjoy.
If you don't have the space in your office for an assistant, or aren't ready to commit to paying a full-time salary, that's not a deal-breaker. Online services like HireMyMom.com, among many others, allow you to hire help on a full-time, part-time, or temporary basis, for work either within your office or remotely.
There is a caveat to this, of course: The Modern Firm owner Brendan Chard observes that just because a few hours get freed up doesn't mean that they will automatically be billed for. Billable work needs to be available. At first, if you hire someone to take on certain tasks, you may find that you have unfilled time on your hands because you haven't, to date, had time to bring on additional cases. As you free up time, that may change; you may be able to accept an extra case or two each month that more than covers the cost of your hired help. However, you'll need to analyze whether, after you have the extra time in your schedule, that additional work is actually materializing.
If you are unwilling or unable to hire somebody to take the non-billable monkey off of your back (for at least part of the time), your best option is to increase your efficiency—and the easiest way to do that is through technology.
There are literally dozens of options for law practice management software. These can address tasks including conflict management, timekeeping, basic bookkeeping, trust accounting, document management and assembly, task management, billing, and more. Different systems offer varying services, so you can pick and choose the options you need.
Of course, getting up to speed on the use of a law practice management system will, itself, take some non-billable time on your part. The upside is that once you've invested those hours, your efficiency should increase without much more investment of time on your part. If you gain even an hour or two a week in productive time, your stress level will go down, and your income will go up.
Last but not least, don't overlook the role your law firm website can play in increasing your efficiency. Forms can be made available to your clients, access can be granted to clients for online bill payment, and more.