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KNOW WHAT IT COSTS YOU —
TIME COSTING
In the near future a number of solicitors'
offices will be invited by the Council to
participate in a time-costing exercise. Apart
from the benefits which may accrue to the
offices the results will be valuable and
interesting as a source of information in
connection with applications to the various
committees which regulate solicitors fees. It
is commonplace that in many professions
and especially in the solicitors' profession
there is a great deal of non-chargeable time.
Some jobs must subsidise others in the
particular circumstances of professional
practice. The question is to determine to
what extent particular jobs are remunera
tive and which jobs would be better undone
or refused if professional practice were
dictated by commercial and economic
considerations. The accountancy profession
is organised on a time costing basis. The
larger offices could not survive without such
a system because the burden of overheads is
so great that the partners must have
continual access to information about the
profitability of various types of work.
Furthermore overhead expenses accrue from
week to week and month to month. Delay in
collecting fees creates dangerous cash
situations and possibly a serious loss under
the heading of interest charges. The
solicitors' profession is becoming slowly
converted to such a system and as amal
gamations increase this trend must be
accelerated. Experience in the legal and
accountancy profession in England has
shown that the introduction of time costing
systems has resulted in a marked increase
in profitability of work based on efficiency.
The following is an example of a time
costing system which can be used in
solicitors' offices. It can be modified to suit
the circumstances of the particular practice.
1. Classify and assign a code letter for each
type of work e.g.
Non-contentious business (A—F)
Code letter
Conveyancing registered property A
Conveyancing unregistered
property
B
Conveyancing Schedule 2
C
Probate and administration
D
Company formation
E
All other non-contentious business
or advice
F
Court business (G—J)
Superior Courts
Civil litigation
Gl
Criminal litigation
G2
Circuit Court
Civil litigation
HI
Criminal litigation
H2
District Court
Civil litigation
Jl
Criminal litigation
J2
Non-chargeable time (K—L)
Office administration
K
Other non-chargeable time
L
For offices which are capable of making
a more detailed break-down of work, such
an exercise would be useful. For instance it
would be useful to establish time-cost figures
for registered and unregistered conveyanc
ing transactions and for the work of
solicitors acting for lessors and lessees
where fee depends on the party for whom the
business is transacted (half fee in the case
of a lessee).
2. Ascertain time-cost factor for each fee
earner.
NOTE (1) A fee earner is a partner or
principal, an assistant
solicitor or a law clerk of
appropriate status and ex
perience. Salaries of all other
personnel are grouped under
general overhead expenses. A
notional figure (hereinafter
called salary) is calculated
for each profit (or loss)
sharing principal based on
previous experience and ad
justed as necessary as a
target for the year. Each
employee/fee earner has an
actual salary. Fee earners'
salaries (including principals
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