Introduction: In the intricate and complex world of law firms, where success is a blend…
Explore the LawKPIs “Billed and Collection for Hourly and Flat Fee Matters“ report – a powerful and key report designed to streamline your revenue management and provide comprehensive insights into each attorney’s contribution to the firm’s financial success.
Accurate revenue tracking lies at the heart of every successful law firm’s financial strategy. However, for firms dealing with both hourly and flat fee matters, efficiently managing the distribution of billable hours and flat fee amounts among multiple users can be an arduous and time-consuming task.
In this blog post, we delve into the significance of the “Billed and Collection for Hourly and Flat Matters” report, its business implications, the challenges it addresses, and the valuable date it presents to track the revenue generated across flat fee and Hourly billing methods, in law firms. By exploring the report’s functionalities, data columns, and underlying logic, we aim to showcase how this innovative report has become an indispensable asset for legal professionals seeking to enhance productivity and profitability in their practice.
Requirement for the Report:
One of our esteemed clients approached us with a critical report requirement – they needed a report that could effectively showcase the hours billed and collected by each user for both flat and hourly matters, while also ensuring the equitable distribution of flat fee amounts among multiple users involved in a matter. This information was necessary to determine the revenue generated by each user for these different types of billing methods for a particular time duration. By actually tracking billable and collected hours for both hourly and flat matters, the client wanted to assess the performance of individual users and identify areas to enhance productivity and profitability.
Challenges in the Absence of the Report:
Before implementing the “Billed and Collection for Hourly and Flat Matters” report, the client faced significant challenges in distributing flat fee amounts among users. With flat fees billed and collected by a single user, the task of allocating these amounts fairly based on non-billable hours was complex and time-consuming. Manual distribution of flat fee amounts between users was prone to errors and inefficiencies, hindering the firm’s financial accuracy and productivity.
The “Billed and Collection for Hourly and Flat Matters” Report: Delivering a Solution:
LawKPIs team responded to the client’s needs by developing the “Billed and Collection for Hourly and Flat Matters” report. This powerful report allows to access the data on billed and collected time for hourly and flat matters, along with a transparent method for distributing flat fee amounts among involved users. Shows the activity billable hours, non-billable activity, flat and hourly billed, and collected amount.
The report includes the time entry for flat and hourly matters and distributes the flat fee billed and collected time amount between the users depending on the non-billable hours they worked.
The report displays the following essential data columns:
User: The user column identifies the attorney or timekeeper from Clio associated with the matter.
Activity Billable Hours: This column displays the billable hours from Clio’s activity tab, based on the activity date.
Activity Non-Billable Hours: Non-billable hours are shown in this column, sourced from Clio’s activity tab and based on the activity date.
Hourly Billed Time Amount: This column represents the hourly billed time amount from Clio’s revenue report, based on the invoice date.
Flat Billed Time Amount: Calculated based on the flat fee and non-billable activity hours from Clio’s revenue report, this column shows the distributed flat billed time amount, based on the activity date.
Hourly Collected Time Amount: Like the hourly billed time amount, this column displays the hourly collected time amount from Clio’s revenue report, based on the transaction date.
Flat Collected Time Amount: This column reveals the distributed flat collected time amount, following the same calculation as the flat billed time amount, based on the transaction date.
The Logic Behind the Report:
This report retrieves the activity billable hours and activity non-billable hours from Clio’s activity tab for the user, depending on the selected time-period. Likewise, the hourly billed time amount is obtained from the invoice date, and the collected time amount is obtained from the transaction date.
In the case of flat fee billed amount, it is calculated or distributed based on the calculation of non-billable hours and the flat fee billed.
Let’s take a practical example to understand how the “Billed and Collection for Hourly and Flat Matters” report efficiently distributes flat fee amounts among users. In this scenario, we have “Larry Max,” an attorney, who has worked on a matter with a total of 24.90 non-billable hours. The entire matter has been billed as a flat fee amount of $5,000.
Non-billable hours for “Larry Max” = 1.50
Total non-billable hours for the matter = 24.90
Total flat fee amount billed for the matter = 5000
To calculate the flat-billed time amount for “Larry Max,” the formula is as follows:
(((non-billable hours per user / total non-billable hours per matter) * 100) * total flat fee amount): / 100 By substituting the numbers into the formula, we get the flat-billed time amount for “Larry Max”: (((1.50 / 24.90) * 100) * 5000) / 100 = 301.20
So, the flat-billed time amount for “Larry Max” in this example is 301.20.
Similarly, the flat fee collected time amount is distributed accordingly.
For the given example, “Larry Max” is entitled to a flat fee amount of $301.20 for his contribution to the matter, based on the proportion of his non-billable hours compared to the total non-billable hours for the entire matter.
The “Billed and Collection for Hourly and Flat Matters” report uses such calculations to accurately allocate flat fee amounts among multiple users involved in a matter, ensuring fairness and efficiency in revenue distribution. This eliminates the need for manual calculations and simplifies the financial management process for law firms, ultimately leading to improved productivity and enhanced financial insights.
Points to consider for working on this report are as follows:
Flat Matters must exclusively contain flat activities; no hourly activities should be present.
Similarly, hourly Matters should only include hourly activities, with no flat activities.
Avoid handling partial payments for flat matters to prevent data duplication.
The flat fee activity amount should not be zero. Since the flat fee amount is distributed based on non-billable hours, a zero amount will not be displayed in the report, even if non-billable hours exist.
Non-billable activities should not have a flat fee amount; they should be considered billed activities. The report focuses on distributing the flat fee amount for billed activities, so it should not apply to non-billable activities.