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concerned. The field of investigation has for their common profit. As a result of such proved to be so wide that much remains to disclosures an immense fund of informabe solved in cost accounting, although its tion has accumulated and is available general principles are well established. through various books and magazines.

These methods of the business world Many hours can be devoted to the explanaare not only profoundly interesting to a tion of various plans of handling office roulawyer, but are of practical use in every tine and to the relative advantages of law office, from the largest organization each, but such methods as are mentioned down to the humble office of the young will be incidental and subservient to the lawyer just entering the profession. They main

main purpose--that of arousing lawyers are likewise available, because of a new to a greater interest in efficient methods. spirit of co-operation that has gradually In a general way, office equipment and been permeating the business world, well systems should serve three distinct purillustrated by a story vouched for as an poses. First, the performance of the task actual occurrence. A candy manufacturer. in hand in the quickest time, and with the as a result of a careful study of his own least effort upon the part of the lawyer and sales organization, found that as a general his clerk. Second, the keeping of aderule his customors, partly through their quate records of all the work performed own fault and partly through the misdirect- so that no loss may result by reason ed zeal of his salesmen, were purchasing of failure to bill for services rendered. candy in large quantities and at infrequent And last, the keeping of the bookintervals. As a necessary result of this keeping records by a system that will practice the ultimate consumer received give the lawyer an adequate idea of his much oi his candy stale, and became dis- overhead expenses, so that his charges may gusted with the brand. The obvious rem- be so adjusted as to provide an adequate edy of suggesting to the retailer the ad- return for his labor and skill after deductvantage of smaller purchases at more fre- ing all apparent costs, and some that ordiquent intervals was applied, and the con- narily are not considered as expenses of sumers of this particular brand of candy doing business. The performance of a soon became aware of its universal fresh- given task in the quickest time and with ness. Up to this point there is nothing un- the least effort upon the part of the lawyer usual in the story, but had the manufac- and his clerk is probably the strongest inturer, and countless other independent in- centive for the installation of modern laborvestigators, kept such discoveries to them- saving appliances. The most common and selves, much of the progress that has rec- useful of these appliances is, of course, the cently been made in business methods would typewriter. Much less common is the dichave been impossible, and the material for tating machine, which is especially valuthis paper would have been unavailable. able to the lawyer. The present cost of four This candy manufacturer was shrewd hundred dollars for a complete outfit has enough to see that many customers, con

tended to restrict its use, but even at that tinually purchaseci stale candy, even though price it is a paying investment to any lawunder the brand of competitors, would in yer who is at all busy. Its advantages lie time turn in disgust to fruit or other lines, in the fact that matter may be dictated at and their trade be lost to his own fresh any hour of the day or night, irrespective candy. To the amazement of his principal of whether a stenographer is present or competitor, he invited the latter to lunch, busy, that there is no limit to speed at which and disclaiming any altruistic motive, made the matter may be dictated, and that there a full disclosure of his discoveries, and is no interruption of transcribing during placed them at the disposal of his competitor the periods of dictation. Typists soon get accustomed to the new system, turn out valuable collection of contract and court more work, and make fewer mistakes. The forms may soon be acquired by making an writer has used the system for six months, extra copy of all such documents prepared, and regards the cost as one of the best in- running a line of red ink through all names vestments he has made.

and special features and assigning numbers Good equipment alone is not sufficient to these blanks. These forms are filed and without a well planned system. All routine indexed according to the subjects, and it is work and all possible minor tasks should surprising how much time they save, as the be delegated to the stenographer. The law-drafting anew, or even the mere dictation, yer's time is too valuable to be taken up of lengthy documents is a tedious process. with such matters. The use of standardized Planning of the office work is necessary forms in

in this connection is of great if it is to be done on schedule and with a value, especially if the lawyer has a special- minimum of effort. This requires a record ized practice. In such offices the most of engagements and matters requiring atconvenient system is the preparation of

tention in the future. The use of a calender standard paragraphs for letters, grouped pad or a diary is satisfactory, but those who under various subjects, which paragraphıs have made the matter a study recommend are numbered and transcribed by the typist the replacement of these by a small card inwithout the necessity of dictation or refer- dex file provided with guides for the days ence other than to the form number. of the month and for each month of the

A great saving in time and improvement year. Slips of paper, on which are jotted in accuracy can be made in drafting deeds, down memorandums, automatically come mortgages, standard contracts and the more to the attention on the day on which they common forms of court proceedings and require action. The advantage of the card orders by the use of standard forms. The index system over calendar pads and dairies writer has, for years, used a system of his is that matters postponed may be reassigned own that is especially convenient. In the new date without the necessity of recase of a deed, a standard form is typewrit- writing the item, the slip being merely taken ten, and in the blank space for the name of out and placed at the later date. Whether the grantors, county, name of grantees, justly so or not, lawyers are frequently accounty, consideration, description, assump- cused of lack of system in this particular. tion of liens (if any), date of deed, date of The filing of documents and corresponacknowledgment and name of persons ac- dence is one of the most exasperating tasks knowledging, there is placed a number, be- that confronts the lawyer. There are ginning with number one and continuing many good filing systems, but all sooner or as high as necessary. To make the num- later break down in some particular. If bers more conspicuous they are written in every paper is permanently filed, the office red ink. In drafting a deed under such an soon becomes congested with transfer cases. arrangement it is only necessary to write For some time the writer has used a sysor dictate the information called for by tem with a reasonable measure of success, each numbered blank, and there is no dan- whereby correspondence is filed in three ger through lapse of memory of omitting distinct sets of vertical files, all alphaor crudely wording some necessary pro- betically arranged.

betically arranged. All live matters are vision. In the case of mortgages and many placed in a vertical file labeled "Pending contracts, separate paragraphs can be draft- Correspondence." As soon as a matter is ed covering every common situation and, closed, the file is inspected as to the advisaby assigning these paragraphs a number, bility of keeping all, or part of it, in a perthey may be included or omitted by mere manent file. If the matter is of a trivial reference to their red ink number. A very nature, it is transferred to a vertical file

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labeled “Closed-Unimportant.” At the profession is too intelligent and progressive beginning of 1920, all 1918 correspondence to lag behind the business world. Theorein this file was destroyed, on the theory that tically, a record should be kept of every any developments requiring its use would minute in the day; practically, only the more have transpired within the year 1919. All important matters can be preserved. In large matters of importance are transferred from offices employing a bookkeeper, each mem“Pending Correspondence" to the perma- ber of the firm should be provided with a nent file of closed matters, and when the pad of printed blanks, on which he will file overflows, are removed to transfer note down the day and hour and time con

In the case of collections, the copy sumed on each item to which he devotes of the letter closing the transaction is placed his attention, and to whom the services are in the permanent closed file, and the re- to be charged. These slips will be assorted, maining papers are preserved for one year posted and filed by the bookkeeper. Such in the "Closed-Unimportant" file. As a system is too cumbersome for the small a complete bookkeeping record is kept of office. A much better record is made by all money transactions, a reasonably suffi- having blanks printed and padded, about cient record remains,

six by nine inches, with a column in which All court papers and documents are the working hours of the day are divided placed in vertical files, pending matters be- into fifteen-minute intervals, followed by ing alphabetically arranged in a file marked columns for the nature of the services "Pending." When matter is closed, rendered, to whom charged and the time the papers are destroyed, if unimportant, consumed. A complete record is thus availotherwise they are placed in a numbered able, and proper charges can be made. In folder, and vertically filed in a Permanent cases where clients question the reasonableFile, of which a record is kept in a card ness of the fee, such record of the work index, cross-reference being made to all done is invaluable. At first it is difficult to parties connected with the transaction. remember to keep such a record, but in time There are frequently so many parties in- it becomes as easy as any other part of the terested in litigation that it is impossible office routine. As a means of refreshing to file the document alphabetically unless the memory such a record often becomes a memorandum is made of the place as- valuable, and from its use many small sersigned to the file and this filed under each vices will be billed and collected that othername. Assigning the permanent file a wise would have been forgotten. In the number and indexing the parties alpha- hurry of busy times, a lawyer frequently betically on a card index requires little forgets extra services he has rendered, but time, and there is less possibility of the file with such a memorandum he cannot do so, becoming misplaced.

and the losses thus avoided amount to a The average lawyer relegates to second- considerable sum in the period of a year. ary importance, if he considers it at all, Every lawyer, for his client's advantage the keeping of an accurate record of all in the trial of cases, if not for his own good, the work he has done throughout the day. should be trained in the fundamental prinHe also gives little consideration to the in- ciples of bookkeeping and accounting. stallation of a system by which he can de- Such a course requires but a short study, termine with a reasonable degree af ac- and the practicing attorney who cannot atcuracy the value per hour or per day of such tend a business college will be amply reservices as he renders. Considering the loose paid for the trouble in taking a correspondmethods of accounting that have prevailed ence school course in accounting. until recently in the mercantile world, this as important for the lawyer to have an condition is not surprising, but the legal accurate record of his income and expenses

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as it is for the business man, and by using fees with the exactness prevailing in the modern methods the keeping of books need sale of commodities, owing to the fact that not be a burden. By the use of the multi- consideration must be given to the expericolumn cash book, whereby the totals for ence and skill of the lawyer, to the amount the month on the most items and not the involved, to the intricacy of the question individual items are posted, much useless presented for trial or determination, to the posting is saved, and the labor reduced to fact that the case was won, lost or coma minimum. Through such a system the promised, and to innumerable special cirwriter has greatly reduced the use of a cumstances, yet the keeping of the records journal. In the case of a collection, the heretofore recommended, and the applicatotal is placed in the total column of the tion to them of the settled principles of cost cash book, the fee retained is placed in the accounting will go far towards removing special column for that purpose, and the net from dispute many charges, especially as to amount is placed in a column which requires small matters. It is the belief of the writer, no footing. If remittance is made during based upon an analysis of records he has the month, thereby closing out the account, kept for some time, that the average lawyer he even avoids the necessity of posting by greatly undercharges for small services placing red ink cross in the Ledger Folio rendered through failure not only to give Column. The account, though not posted, adequate consideration to the monetary exis nevertheless indexed in the ledger by pense of doing business, and through failshowing the Cash Book page, so that it may ure to consider the delay in larger matters be readily found should occasion require. caused by the interruption, but from comSuch a system represents the minimum of plete neglect to take into consideration that effort consistent with a complete record. over-head in a lawyer's office should include By carrying special columns in the cash also the time devoted to routine work that book for office expense, law library and cannot be assigned directly to any particular any other subdivisions of expense that may client. Any lawyer who keeps a record by suggest themselves, a complete record of ten or fifteen minute periods throughout these items can be made with little labor by the day will soon discover that, on the averposting the totals of the columns at the end age, a very considerable part of his day has of the month. In this day of universal ,in- been occupied with work that he can not come taxes, it is well to see that these class- charge directly to any particular client, but ifications are made according to govern- from which all clients derive a benefit. On ment rules to obviate the necessity of the average, the lawyer has spent probably separating items not allowable as credits in fifteen minutes in opening his mail, thirty the income tax return. A lawyer should minutes in dictating miscellaneous letters, keep a record by months of his gross in

fifteen minutes in making his bank deposits come of prior years. In no other way can and writing checks for office matters, fifhe know either his present standing or the teen minutes in reading advance sheets of progress he is making as a money-maker. the reporter system and in keeping up to In the small office, a weekly cash balance is date with the decisions, an appreciable time sufficient, though the daily balance should in purchasing office supplies and considering be taken in larger offices, and in each case and making changes in his office system to the trust funds should be deducted in order provide for the growth of his business, an to demonstrate that they are unimpaired. appreciable time in keeping his books, and

The fixing of fees upon an intelligent and an appreciable time in disposing of book demonstrable basis would relieve the lawyer agents, and in doing his part in civic and of many disputes and misunderstandings. charitable enterprises that require attention While it will never be possible to determine during office hours. Where there is only

one lawyer in the firm, this expenditure of lawyer should estimate his overhead extime on the average probably amounts to penses. Assuming that the rent, light, two or three hours per day, and may even taxes, salaries, supplies and other office exexceed this figure. In a large law office, penses of a lawyer amount to $1,500.00 per where the increased number in the firm per- year, and that he puts in an eight-hour day mits a more competent clerical and account- except on Saturdays, when he closes at ing force, with lessened detail burdens on noon, and that he takes a two weeks' vacathe members of the firm, the total loss of tion, we have 50 working weeks of 52 hours time will be less, but the gain will offset each, making a total of 2,600 working hours to some extent by the increased salaries, over which to distribute the overhead of rent and cost of office equipment and sup

$1,500.00. On this basis the lawyer must plies. From the point of compensation the earn fifty-eight cents per hour in each and lawyer is selling his time, which has a value every working hour of the day before he in proportion to his experience and skill, can receive one cent of compensation for but in making this sale he is not in the his own services. A lawyer with such an situation of the mechanic who sells so many overhead should be able to withdraw a net hours' service, and who receives a net in- income of at least $3,000.00 per year, which, come with no deduction for heavy office ex- on a basis of 2,600 working hours per year, penses. The lawyer is rather in the position will require a charge per hour of $1.16 for of the merchant who sells an article which his own services and, including the overcost him a definite sum. Before determin- head, a charge of $1.14 per hour for each ing the sale price of this article, the mer- and every working hour in the year. Manichant estimates the total expense for the festly, he cannot actually charge clients year of rent, light, heat, insurance, taxes, directly with 2,600 hours of work per year, salaries, depreciation and obsolescence on because a considerable portion of each day fixtures and equipment, allowable for un- is spent in necessary labor that cannot collectable accounts, the usual interest or directly be traced to any particular client. rate of return on capital invested, and all Assuming that two hours of each day canother costs of doing business. Assuming not be directly traced, twenty-five per cent that these expenses amount to $20,000.00,

of the combined labor and expense charge and that probable annual sales amount to of $1.74 must be added to it, bringing the $100,000.00, the overhead amounts to twen- value of the lawyer's services per hour up ty percent of the sales, to cover which the to $2.18. The lawyer with such data knows mark up must be at least that much. Before the value of his time, will be more careful the days of profiteering, an article costing in its conservation, and will see that every one dollar on this basis would probably have service bears its proper charge. It does not been priced at $1.25, the extra five cents follow that the lawyer will bill his clients at being justified on various grounds.

$2.18 per hour, or whatever his figure At the end of the year these estimated proves to be, as other elements already costs are compared with the actual cost, stated may influence the actual charge. and a fair basis arrived at for predicting the

The writer believes that if a survey were overhead of the ensuing year.

For the made of a number of representative law merchant the problem of determining over- offices where a record is kept of all time head is further complicated by the necessity

consumed, that the average loss per day of keeping separate records of various de- because of unaccounted time would be partments, but this feature will be ignored nearer fifty per cent than twenty-five per in order that the general principles of cost cent, but in order to be conservative he has accounting may not be obscured by a multi

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based the assumed figures on the twentyplicity of details. In much the same way a five per cent loss.

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