Case Analysis—Time and Billing System
Grace Ho started her own law practice ten years ago. Her firm, Grace Ho and Associ¬ates, specializes in estate planning and currently employs five attorneys, two lewd as¬sistants, one legal secretary, and a bookkeeper/receptionist. The firm has always used a manual accounting system, which includes procedures for time and billing. Each at¬torney fills out time sheets in 15-minute increments. These time sheets are turned over to Susan Burgess, the bookkeeper, each week. Susan uses the time sheets to pre¬pare dient bills. Once a month, Susan delivers the time sheets and other accounting data to the outside accountant who uses the information to prepare financial reports and tax returns.
There are several problems with the current system. Recently, a few dients have complained about the lack of detail on their bills. A customer invoice simply shows a total dollar amount due, which is calculated by multiplying the billing rate for each attorney times the number of hours spent on a client's work. The system adds an overhead figure of 70 percent to the bill to cover the costs of the legal assistant's time, secretarial work, phone and office expense, copy charges, postage expense, and so on. Besides client complaints. Susan is upset because she has a very difficult time getting the attorneys to fill out their time sheets properly and turn them in on time. She is not confident that the bills she sends to clients are accurate. She suspects that an attorney often has to go back and reconstruct his or her time sheet from memory rather than recording time as it is spent on a client task. Finally, attorneys are unhappy because they do not like to be bothered with 'all that accounting detail' when they feel their time is better spent on client matters.
Grace's practice is expanding. She is now doing bankruptcy work plus estate planning. As a result, she intends to hire two more attorneys and another legal assistant next year. She is concerned that she needs to automate her accounting system to solve its current problems and to help the expansion of her practice.
Need help with this:
1) How can an automated time and billing system help Grace Ho and Associates?
2) What technology is available to automatically capture a professional employee’s time spent on a particular client engagement?
3) Design a new client bill for Grace Ho and Associates. Rather than using a 70% overhead charge, show a breakdown of cost in detail and explain how you would gather the data to calculate each cost.
a) Draw a flowchart of the time and billing system at Grace Ho and Associates.
b) Discuss the need for documentation during and after the development of the system being considered.
c) Explain operational, tactical, and strategic reporting.
d) Construct system-generated operational, tactical, and strategic reports (one each) that would be used for management planning and control.
e) Develop a use case for the new client bill.