A lawyer’s time and advice are her stock in trade, so billable hours are front of mind. But a focus on hours billed ignores the more useful metric: realization rates. Your realization rate is the percentage of the time you work that is billed to the client and that the client pays. And it’s a key factor in determining and improving your bottom line.
Realization matters because:
- It is a strong indicator that the client is satisfied with the attorney’s use of time.
- It is one of the most important factors in assessing a firm’s financial strength.
- It can inform the ethical analysis of whether fees charged are “reasonable” as required under Model Rule of Professional Conduct 1.5.
This leads to the tension that dominates the modern practice and business of law: how to produce top-quality, near-perfect work at a cost that makes clients happy and fairly compensates attorneys for their time, knowledge, and skill.
Write-downs, Discounts, and the Business of Law
Write-downs and discounts reflect what the billing attorney believes is a reasonable cost for the service provided. The final bill is further adjusted in anticipation of what a client will find reasonable. But with every tenth of an hour cut from the bill, the firm loses the value of that time, reduces realization rates, and sets a precedent for billing discounts. To effectively manage a law practice, attorneys must look at the reality of their business.
The reality is that clients don’t understand the nature of preparing legal documents. Clients can see that certain work, such as legal research and developing theories, are the core of what they are paying for. However, they often don’t see that revising, proofreading, and polishing a legal document also requires an attorney’s skill. So these hours are frequently cut from the client’s bill. This is a real challenge because neither working harder nor working less can solve this problem. Plus, it is unethical (and no fee at all can be reasonable) if efforts to keep bills low mean that an attorney has failed her duty to perform her work competently.
Using Software to Improve Efficiency and Boost Profits
Can technology help solve this problem? It’s certainly worth investigating. Attorneys can use:
- Knowledge management software to leverage prior research and drafting work done by other attorneys in the firm.
- Document management software to utilize templates that reduce time spent setting up documents and redrafting boilerplate provisions.
- Proofreading and editing software to check documents for consistency and common errors, and to polish documents so that final rounds of review are cut down from several hours to just minutes.
None of these technology solutions remove or reduce the rigorous and substantive thinking that attorneys bring to their work. Rather, they enhance the final work product and trim much of the time that either goes unbilled or gets greatly discounted.
Most lawyers already use knowledge management software and document management solutions, but proofreading software is still relatively unheard of and not widely used. To the extent that it is used, the focus is on expensive licenses that cost $1,000+ per seat. But it doesn’t have to be that way. Two products that cost less $150 stand out: WordRake and PerfectIt (full disclosure: the author has no affiliation with WordRake but has worked to adapt PerfectIt for the legal sector and has a financial interest in it). Both products are add-ins that work within MS Word.
Inexpensive Proofreading Solutions
WordRake scans your text and suggests writing simplifications. It enters recommendations directly into the document using tracked changes, then you simply accept or reject each proposed change. It’s a quick and efficient way to reduce legalese. And because it provides a fresh look at the document, it also helps users to make their work better without extra staff time.
PerfectIt has been widely used by professional editors for years, but now includes a built-in style sheet for lawyers called American Legal Style. It uses Black’s Law Dictionary and the Bluebook to check spelling, capitalization, italicization, terms of art, consistency, and other aspects of legal style. You simply select “American Legal Style,” press “Start,” and it guides you through each possible correction. It’s one of the fastest ways to check your text.
Both PerfectIt and WordRake have simple, easy-to-use interfaces that do not require any training. They offer different yet complementary editing and proofreading functions. And they can be used separately or together, depending on what functions you’re looking for. No software can entirely replace proofreading a document manually. However, using any combination of PerfectIt and WordRake cuts the amount of time you spend on a document (especially the number of times that you read through it).
Technology can help attorneys work smarter to achieve the same results in less time. Moreover, using proofreading software helps reduce the time spent on work that clients won’t pay for. This improves realization rates and the bottom line, while helping attorneys meet ethical obligations related to billing and competency. When low cost solutions—that don’t require a lot of training—are available, they’re worth trying. You can find a free trial of both products on their websites: www.wordrake.com and www.intelligentediting.com/americanlegalstyle