The Importance of Docketing

Why do lawyers docket? What is its purpose? Has the act of docketing run its course for modern law firms? For the purposes of this article, for a lawyer to “docket” it means to input a record of their activities completed for the client along with the time it takes to complete the activity (later multiplied by an hourly rate for billing purposes). Whether doing it by hand, manually inputting into a spreadsheet, or using a legal management software like Cosmolex or Clio, docketing is crucial in the billing process and ultimately the conversion of legal activity into the earning of money both for the firm and the individual lawyer. There are many areas of law that charge flat fees, contingency, or monthly subscriptions where docketing becomes less important. But for the majority of firms and areas of practice still billing against retainers or operating billing per hour system, the docketing of activities is a prerequisite to earning one’s keep as a legal professional. But ironically, though many young lawyers enter the profession with dreams of significant compensation, the very activity that leads to these earnings are completely ignored. Docketing is often not taught in schools, nor training properly given to young lawyers – certainly not those opening their own practice. Instead, it is a lamentable activity and one that is not understood, nor its importance explained properly.

So why is docketing so important? Why are there hourly billing targets for lawyers? What is the point of paying large sums to legal management software? I will take this from several different perspectives – (i) the employer (ii) the docketing lawyer, and (iii) the client.

First, the employer, managing partner, owner etc. They need this information because they are running a business – any moneys that are leaving the firm’s general account are constantly reviewed and minimized to increase profits for the business’s shareholders or partners as applicable. Payroll is one of, if not the, largest expense in a law firm – thus revenue information relating to a lawyer’s billings is required not just to justify that lawyer’s status at the firm, but also to determine whether there is more capacity to grow and invest in more staff. An employer needs to make personnel decisions (who to hire, promote, terminate, move positions) based on more than personal feelings, and the employee in turn would like to be judged by actual performance metrics. These metrics (in most firms) are the “annual billings” because how much a lawyer bills or brings in future billings relate directly to firm revenue. When you or your team do not bill enough to justify the carrying cost of your salary and the expenses you take up (office, clerks, benefits, software subscription etc.) then the employer knows it is time to let you go or maybe move you to a different position. Conversely, when your team is billing at a rate where the firm profits from all of the activities, then come perks, promotions and most important – business leverage in negotiating with suppliers, clients, and your employer. So, docketing your activities whether billable (to show revenue execution), non-billable (internally training/mentoring or going to events to bring in business that can be billable) is the only measurable way to prove to your employer what you do and your value to the firm.

Second the docketing lawyer. You cannot short-change yourself when docketing these activities – no one else will know how hard you are working. Some lawyers forget to docket, some do not “feel” they should docket certain activities, some internally discount the time spent or their rate without telling the employer or the client this is taking place. Do not do this. The difference between your revenue, career advancement, promotion, termination, and relationship to clients lies in whether or not you are docketing. What is so silly about it is that the simple inputting of an activity properly is the difference between making money or not. For example, inputting “review document = 1 hour” at a rate of $300/hour makes the firm $300. If you are paid on split fee, you get your split. If you are paid as a salary with targets, you are closer to your targets for bonuses or salary increase. The only extra work that need be completed is not on a file, but to simply input the data – the softwares and finance personnel working at your firm does the rest. This means the difference between making money and not is just telling everyone what you did that day. That’s it. Many lawyers fail on this one tiny but significant point. They can be the smartest lawyer, the most profound thinker, hardest working on nights and weekends and burning out with troubled mental health. But without telling anyone what you do so that it can be billed, none of the activities that a lawyer stresses over will be converted to money. Sure enough, I have seen many lawyers that are worse lawyers but are more successful in their careers because they are simply better at docketing than another.

Which brings me to the third stakeholder: the client. The client needs to see these activities so they are not surprised by their billings and can budget accordingly. It provides transparency to them and avoids misunderstandings for the work being completed. For example, if the only correspondence between a lawyer and client is one or two emails and then a bill for $5,000 appears, there is bound to be resentment and complaint (although constant communication is key in providing value to a client but that is a different matter). The client doesn’t know you have discounted your time already or your rate in certain cases and because they do not know, they cannot appreciate the gift. Docketing your time accurately is part of transparency to the clients and discounting/waiving of fees can only occur after this has happened. Docketing is also what bill assessment officers and the Law Society will be looking for as well – memories fade but docketing provides a clean record to show clients and third parties what they have asked of the lawyer.

How often to docket (concurrently,  daily, weekly, biweekly) is up to the individual, but find a system that works for you or a coach/mentor to help develop a system with you. The current legal softwares make it easier than ever to docket and bill. While servicing the public is a worthy goal for a lawyer, bills still need to get paid. Unless you are working for a charitable or government organization, all action in the private practice of law must yield capital, or you are in the wrong profession.

This article was originally published by Law360 Canada, part of LexisNexis Canada Inc.