The Law of Diminishing Returns states that if one input in the production of a commodity is increased while all other inputs are fixed, a point will eventually be reached where additions to the input begin to yield smaller returns. In other words, throwing bodies at a problem doesn’t necessarily increase output and may decrease output. This law can be applied when attempting to squeeze in more hours to the standard work day.
Corporate law departments are increasingly scrutinizing the amount of time outside counsel bills for tasks and looking for inefficiencies. Law firms are also analyzing time billed out to ensure they work within client billing guidelines and address any potential issues of fraudulent billing before they reach the client.
Legal Decoder’s Compliance Engine flags timekeepers who bill more than 8 hours per day (aka Hourly Max flag). The reason behind the Hourly Max flag is a timekeeper’s efficiency level decreases when working in excess of 8 hours per day. The way this rule works is the Compliance Engine flags all line items that have exceeded a total of 8 hours in a day. For example, John Smith’s daily time entry for work completed is as follows:
We analyzed customer data for patterns and trends on all instances where line items were flagged as Hourly Max. First, we wanted to look to see if there was a trend in how time reporting occurred. Based on the data the largest spikes and dips occurred in the middle of the month and just a few days before the end of the month.
Next, we wanted to see if there was a correlation between word count and hours recorded. Below is a graph of all line item narratives flagged as Hourly Max. The trend is the longer the word counts the more time is recorded. Two reasons are the work being recorded is more complex, thus, takes more time and Block Billing. Block billing should be avoided as it combines many work tasks into one entry but makes it difficult to discern if bill padding (fraudulent billing) is taking place.
Within the data, 8.5% of narratives contain 5 words or less with many of the entries being vague descriptions (e.g. “Reviewed same”, “Teleconference with client”). The longest line item narrative contained over 650 words. There were several instances of Hourly Max exceeding 24 hours of work in a single business day.
You may be asking “Why would I care that a lawyer is working more than 8 hours a day? That’s what I pay them for.” Lawyers are humans and humans are not machines. After a certain amount of time of working, concentration and energy levels decrease. Being realistic, many people do work more than 8 hours a day on billable and non-billable work while producing quality work products. Some of our clients are fine with their outside counsel billing more than 8 hours a day especially if it is in preparation of a trial or some other important event. Yet, for many, “powering through” can result in error-prone work products and remediation of those work products which could lead to inflated costs and decreased effectiveness.