Pushing time: the pressure on chargeable hours

Whether law, tax or corporate services, businesses which sell their knowledge and experience by the hour want to maximise the utilisation of their assets – their people. The goal is to sell as much time as possible while balancing this with providing good service whereby the client feels they received value for money spent.

Different businesses approach billable time in a variety of ways. For example, law firms may provide a lawyer a target of billable hours to be completed in each year, whereas a corporate service provider may provide an administrator a percentage of time spent in each working day which should be chargeable on clients matters. Whichever method is used, there is a pressure on the team member to meet the target and a requirement on the business to feed chargeable work to the team.

While many aspects of business have developed and modernised, and the health and wellbeing of team members is now a mainstream topic, the billable unit remains. The pressure to achieve billable targets often increases in economic downturns; this can be highly stressful, especially as time targets are often the first to be placed under scrutiny to enhance revenue. Increasing pressure to charge time can have serval downsides:

• Presenteeism may become an issue as team members start working over and above their normal working hours to achieve targets. This increases the likelihood of errors due to tiredness and possible burnout in the long term;
• ‘Time dumping’ could occur; i.e. a team member over-records time to a client to meet their targets. This is a particular temptation when clients are on a fixed fee arrangement;
• Clients question invoices, value for service provided and may opt for a different service provider as the relationship inevitably deteriorates;
• Team members shun training and other essential non-chargeable activities.

This is not to say that recording time and charging is not essential for businesses which sell time; it is – and in such businesses team members are the most valuable asset. Therefore, businesses should be mindful to maintain and retain their team and ensure appropriate and achievable targets are set. For example setting targets of 90-100% chargeable time may benefit the business in the short term, however, it leaves virtually no time for in-house administration, training, social interactions or, dare I say it, toilet breaks. It also leaves the team with very little “thinking” time as the pressure to churn through client work is ever present; this may reduce the quality of the work being produced and ultimately call into question the value of the time being billed. Providing a realistic yet profitable target which can be exceeded and celebrated will benefit both the team member and the business far better.

So do clients really care? While many clients are unlikely to ask about a business’s internal team target, they do want value for the services they receive. This value is enhanced by having appropriate targets and team members who are not over-pressured to bill additional hours. Clients are also becoming increasing savvy to the reputation of businesses they work with.

With the modern shift in employer/employee relations, fee earners are more alert to the value they bring a business and their contribution to its revenue. Where pressure and targets increase unreasonably team members are likely to vote with their feet which can further damage a business if they are already feeling the economic squeeze. Clients are also showing an increase in loyalty towards individuals who they value within a business rather than the business itself – following a trusted advisor who understands them rather than the business who may only see them as a number.

Businesses, therefore, need to develop the ability to strike a balance between profit and productivity; a skill that’s often underestimated. Where businesses try to squeeze their clients and teams for every penny, the relationships will eventually be destroyed. No business wants to be known for their toxic culture, so perhaps now is the time to step back and re-evaluate the approach to billing targets and pressure to meet them.   

About the Authors:

Heather Gordon is Legal Director at Martyn Fiddler Ltd. Heather joined the team in 2013 having previously practiced within a leading Isle of Man law firm’s aviation practice since 2007. Heather holds graduate and post graduate degrees in law and studied internationally for her MBA.

Lyndsay joined our group of companies in 2009. She is currently studying towards the Institute of Leadership and Management qualifications. She has more than 25 years' experience in the financial services and fiduciary industries and has held several senior positions within financially regulated businesses during her career. Her attention to detail is well known within the industry, as is her dedication to providing the highest level of customer service to our clients.