Page 13 - Law Society of Hong Kong MPMC Manual v8 - With checklists (1 March 2018)

Practice Management Course | Unit 2
Financial Management

• Do not forget to record your time (e.g., use a clock, scribble sheet, e-mail
alarms).
• Record your time as contemporaneously as possible (e.g., use a mobile
application to record time when out of the office).
• Do not consciously discount for ‘good’ clients.
• Do not discount for inefficiency
• Do not write off work in progress at billing time, this results in a double
discount at billing time.
• Do chargeable work during the part of the day you are most productive.
• Plan and schedule your day to minimise interruptions.
• Introduce criteria for non-chargeable work such as meetings.

Work in progress (WIP)
15. WIP refers to work that has been performed for the client, but has not yet been
billed. It may be required for the practice’s accounting requirements in terms of
financial reporting, taxation and other purposes. It is also a useful management
tool, to keep a track of the value of work that has not yet been billed and to
monitor productivity. There are two key issues related to WIP management: (1)
write-downs or write-offs in the value of WIP; and (2) delays in billing WIP. We
tackle each of them in turn.

Optimising WIP write-downs and write-offs
16. A WIP review procedure that analyses where and why you are writing off or writing
down hours may clarify areas for improvement. Reasons for writing off hours
include:

• A high likelihood that the client will not approve of the final amount, if it is
time-based billing.
• A junior lawyer taking too long to do certain work due to lack of skill or
experience.
• Re-doing the work of another lawyer.
• Spending hours on the wrong task due to a misunderstanding or
ambiguous instructions.
• Handing the file over to a different team member and spending time to
bring them up to speed with the file.
• Over-servicing (i.e., work was done by a partner, but could have been
done at a lower level and cost the client less).
• Not obtaining a good result for the client despite all the hours spent on the
matter, and writing down the bill to be reflective of the result achieved.
• Consciously applying a discount because they are a ‘good’ client.
• Under quoting on a fixed-fee matter.
• Waiting too long to bill, resulting in the client being reluctant or resistant to
making payment – because either they have forgotten the value or the end
lump sum is too big. Instalments would have been more palatable and
more manageable.
• Not having any money in trust and having no idea where the client is now.

17. Based on your review, you can then set out strategies to tackle WIP. They typically
fall under the following categories: (1) systems; (2) practitioner discipline; and (3)
client communication.

© The Law Society of Hong Kong (2018) Page 9