what percentage of a lawyer time is billable

Now, also consider that not all office time is billable. In fact, small-firm attorneys spend about 61% of their time doing billable work. For solo attorneys, this number is more like 55%.

Full Answer

What is the average hourly billable rate for a lawyer?

As reported in Clio’s 2021 Legal Trends Report, the average hourly billable rate for lawyers has been on the upswing in recent years and hit $300 by the start of 2021. 8. The highest average hourly billable rate by state is $411 in DC

How many Billable Hours does an attorney need to keep up?

That’s the kind of schedule an attorney would need to keep up to hit 1,892 billable hours in a year. It means never letting a meeting run over 30 minutes, never leaving work early for an appointment.

What is billable time in the legal industry?

For instance, answering an email from your boss does not constitute billable time. Answering an email to a client, though, is billable time. Attending a mid-year review to talk about your performance is not billable time. Attending a mid-day meeting with a client is billable time. The legal industry is unique.

What is the average number of billable hours for a firm?

Firms “average,” “target” or “minimum” stated billables typically range between 1700 and 2300, although informal networks often quote much higher numbers. The NALP Directory of Legal Employers (www.nalpdirectory.com) contains billable hour information in the “hour and lifestyle” tab, although many firms choose not to share their data.

What is a normal amount of billable hours?

between 1700 and 2300It's not a complicated equation – the more hours you bill, the more revenue for the firm. Firms “average,” “target” or “minimum” stated billables typically range between 1700 and 2300, although informal networks often quote much higher numbers.

How many hours do most lawyers bill?

How many hours do lawyers work? Most lawyers work more than 40 hours a week. It's not uncommon for lawyers (especially Big Law attorneys) to work up to 80 hours each week. On average, according to the 2018 Legal Trends Report, full-time lawyers work 49.6 hours each week.

What percentage of hours should be billable?

For most service companies, 30 percent is considered a good efficiency rate, while 50 percent would deliver extremely efficient employee costing. That means out of eight hours, if a technician does approximately 2.4 hours of billable work per day, the billable hour percentage averages 30 percent.

How do lawyers calculate their hours?

Lawyers work hard, and they work a lot. Many firms expect attorneys to reach minimum billable hour requirements ranging between 1,700 and 2,300 hours per year. According to the 2021 Legal Trends Report, lawyers spend just 2.5 hours each workday on billable work.

How hard is it to bill 2000 hours?

For example, if you want to reach a goal of 2,000 hours annually, you would need to bill for roughly 40 hours each week, or eight billable hours a day. You may not work exactly eight hours each day, but this breaks down what you should average in a day, week, and month to reach your annual goal.

What does 1800 billable hours look like?

To achieve 1,800 billable hours, an associate would work her “regular” hours plus an extra 20 minutes Monday through Friday, or work one Saturday each month from 10:00 a.m. until 5:00 p.m. The first option would give an attorney 1,832 billable hours, with a total of 2,430 hours spent “at work” (AKA: including ...

Do you bill for invoicing time?

Typically, it depends on the client and your relationship with them. For larger, higher-paying clients, you can typically bill for the full amount. With smaller clients who are budget-conscious, you may consider only billing for the time you spent with them.

How many billable hours are in a 40 hour work week?

The most basic magic number is the 40 hour work week. This one likely doesn't need much description for where it comes from. It's eight billable hours in a day, five billable days a week.

What is billable rate?

Billable rate is the amount you charge customers for products and services. Essentially, it's the price. The billable rate determines how much you will make from sales. This is separate from the bills you pay to run your business.

How do you calculate billable rate?

One way to calculate a bill rate is to use a pricing multiplier. Start with the base salary of an employee, $80,000 per year. Divide that by the number of work hours in a year, which is about 2080. This results in an hourly rate of around $38.50.

How do you bill time in a law firm?

Unless someone told you otherwise, bill all the time you spend on a task, even if you know some of it will be marked down. At most firms, you will still get credit toward your billable hour goal for all the time you enter into the firm's billing software, even if not all of that time is billed to the client.

How many billable hours are in a year?

2080 billable hoursIf you do the math, 260 days x 8 hours per day = 2080 billable hours in a year.

How many hours do lawyers work?

The average number of required billable hours in 2015 was 1,892, according to the National Association for Legal Professionals. But billable hours make up only a percentage of an attorney’s working hours, as a 2018 Yale report shows. The report assumes lawyers may take off five weeks of work in a year for PTO or vacation. To achieve 1,832 billable hours, the associate would have to work 10 hours and 20 minutes a day, every day, for 47 weeks.

What is billable hours?

Billable hours are any hours worked that must be compensated. If you spend four hours balancing a client’s books, and you’re paid by the hour, you have four billable hours. However, you have to have a record of your time worked to bill that time to the client. And that’s just one step to recording and being paid for billable hours.

How to multiply billable hours?

Multiply your billable hours by your hourly rate.

How many hours do you have to work to get 1,832 billable hours?

To achieve 1,832 billable hours, the associate would have to work 10 hours and 20 minutes a day, every day, for 47 weeks. To meet today’s industry average of 1,892 billable hours, an associate would have to add 60 more hours in the year. That’s around 15 more minutes of billable time a day, which culminates in an average workday ...

How long is a casework team meeting?

Attend a 30-minute team meeting about casework.

What time does a resume work?

Resume work on your client’s case, and work from 1 PM to 3:45 PM.

Is billable time always black and white?

Billable hours seem like they should be black and white, but they aren’t always. Generally, if you can tie your work back to the client, your time is billable.

What percentage of hourly rate do lawyers keep?

If practicing solo, a lawyer takes home whatever he or she receives after paying expenses. Typically, that’s 40 to 60% of gross receipts. When I practiced solo, the last ten years of my practice, I had very few expenses (no staff, no rent, etc.) and generally would keep around 90% of my gross receipts.

How much do lawyers keep in their fees?

Lawyers who work for other lawyers, as Dana H. Shultz observes keep in the range of 1/3 of fees with 1/3 going to overhead and 1/3 going to the one or more owners of the firm as profit and for generating the work. When the employed attorney brings the client to the firm he or she may get a

Why do lawyers cost so much?

If the number of available lawyers dried up (ie, reduced supply), soon er or later, some lawyers would raise their fees to be paid more for their work.

What are non-billable activities?

Other non-billable activities include administrative matters, training less experienced employees, marketing, continuing legal education, and investigating whether a potential client has a viable claim.

Why do banks keep 1/3 of their hourly rate?

Because they are worth it. They probably keep about 1/3 of the actual hourly rate, with the majority going to overhead and taxes.

What are the costs of an attorney?

Those costs include wages to employees (i.e.secretaries, law clerks, paralegals, non-partner attorneys), taxes, rent, IT, legal library (usually online these days), utilities, telephone, office equipment and furnishings, insurance, office supplies, transportation and travel, advertising and marketing, case related expenses ( e.g. filing fees, service of process, deposition transcripts).

Is a lawyer salaried?

Probably nothing — because most lawyers worldwide are just salaried office workers too.

How do law firms make money?

One important aspect of law firm life that is nearly impossible to avoid is the “billable hour.” Most law firms make their money by billing their clients by the hour. In order to be profitable to your firm, you must make enough money from your billable hours not only to cover your salary and your overhead, but also to generate revenue for the firm. It’s not a complicated equation – the more hours you bill, the more revenue for the firm.

What time do you work on a half hour commute?

With a half hour commute (to your desk and working) you are “working” from 7:30 am to 6:50 pm With a one hour commute you are “working” from 7:00 am to 7:20 pm, Monday - Friday

Where is the lowest hourly rate for lawyers?

At the other end of the spectrum, the lowest average hourly billable rate for lawyers in the US is in West Virginia, according to the 2020 Legal Trends Report. The report also looks at rates adjusted for cost of living, which is worth looking at if you’re deciding where to practice.

How much do lawyers make?

As of May of 2019, the US Bureau of Labor Statistics Occupational Outlook Handbook reports that the median annual wage for lawyers was $122,960. While it varies by region and practice area, knowing the lawyer statistics for average pay can help you assess where you stand when it comes to income.

What is the collection rate for lawyers in 2020?

The 2020 Legal Trends Report also notes a collection rate (that is, the percentage of hours collected divided by the number of hours invoiced) of 88%—which means that lawyers are not paid for 12% of hours that they’ve worked and billed to clients. Finding a way to increase this rate could mean more potential revenue coming in for the hours already worked.

How many lawyers are there in the US?

Specifically, for every 1,000 residents in the US, there are only four lawyers. Knowing the status and size of your industry helps you understand your playing field in the legal marketplace.

How does tracking performance impact a lawyer?

Tracking performance and productivity impacts your success as a lawyer, so lawyer facts and statistics that highlight how attorneys spend their time are invaluable performance indicators. The 2020 Legal Trends Report, for example, reports a utilization rate (i.e. the number of billable hours worked divided by the number of hours in a day) of 31%—which means that 69% of a lawyer’s work day is spent on non-billable activities.

How many lawyers were white in 2010?

The American Bar Association’s 10-year look at lawyer demographic trends shows some movement towards equality (in 2010, only 31% of lawyers were female and 89% of attorneys were white), but the statistics about lawyers show that the profession still has work to do.

What is the job outlook for lawyers?

The job outlook for lawyers—according to the US Bureau of Labor Statistics’ Occupational Outlook Handbook —is overall positive , with a 4% projected growth rate for lawyers between 2019 and 2029, which is in line with the projected average for all jobs.

How many hours do lawyers work?

For lawyers who are working 70 or even 80 hours a week, it can become easy to forget how that time was spent and how much of that time really is billable hours. Fortunately, when law firms use legal practice management software like Smokeball, they can easily track lawyer work hours and create a billable hours chart that allows partners ...

What Are Billable Hours?

Billable hours are the lawyer hours that clients pay for directly. There are tasks that a lawyer does that is just part of the work needed to work at a law firm but then there are tasks that are directly related to the client’s case. Time spent on tasks directly related to a client’s case can be billed for the most part to the client. These are the hours that law firms want to maximize so that they can run a profitable business.

Why is billable hour important?

It’s important that law firms devise effective strategies for getting the most out of their billable hours while helping lawyers and clients understand just how law firms bill. December 18th, 2018.

Why use billable hours chart?

Law firms can also use an attorney billable hours chart to see if there are any inefficiencies in the way associates are spending their time but there are limits to how much time any associate can squeeze out of a workday. If a law firm is tracking their time and maximizing their lawyers’ billable hours and they are still unable to turn a profit, they may need to examine other sources of their financial trouble such as a too low fee or too high cost of overhead.

Why is it important to have high quality time on a client case?

Increase quality but billable time on client cases. High quality time on a client case improves customer satisfaction and is profitable for the law firm because clients refer others and return when they need lawyer services in the future.

When law firms are making their billable hours targets, do they need to consider their profitability?

When law firms are making their billable hours targets they need to consider their profitability but they also need to consider the practicality of demanding that lawyers work incredibly long hours as a standard instead of an exception.

What happens if a law firm doesn't pay all of its expenses?

Once a law firm has paid all of their expenses, the profit/equity leftover is shared amongst the equity partners. If lawyer hours in the law firm didn’t include enough billable hours, equity partners could face a serious decline in their compensation.

Who knows how many hours a lawyer is billing?

Only the firm bookkeeper really knows how many hours a lawyer is billing. And the number of hours billed isn’t the single determining factor when it comes to law firm profitability.

Why do small firms bill less hours?

But that doesn’t necessarily mean profits must also be lower. It’s the overall business model that drives profitability. Let your business model drive you. Don’t let the chatter from other firms, especially when it ’s all about one narrow measurement, cause you to lose focus.

Why aren't my associates billing?

The associates aren’t billing because there isn’t enough work for them to bill. That’s a marketing problem, not an associate management/billing problem. Of course, some firms have plenty of work and still aren’t getting what they perceive as satisfactory billable hours from their associates.

Why do we have to keep switching billing?

The shifting agendas, priorities, and tasks require us to keep switching our billing from one client to another. That often involves getting back up to speed, opening different files, clearing our heads, and focusing on something different. Billable time is lost as we transition from one matter to another. Our ability to log hours to our clients is diminished when we’re constantly required to shift our attention from issue to issue.

What matters with respect to billables?

What matters with respect to billables is this: how many of those billed hours actually result in revenues collected by the law firm? Of course, it’s also essential to factor in the cost of those hours in payroll, etc. Profits matter.

How to determine profitability of a business?

Your business model and your ability to make those numbers actually happen–with great marketing, management, and technology– determine profitability. Focus on the bigger picture without getting overly bogged down in the hours billed by a particular associate during a particular month.

How many hours should I work on my system?

I think you can use 100 hours to give yourself a sense of whether your system is acceptable. If you’re below 100, then you need to make some quick changes. If you’re at, or above, 100 per month, then you can breathe a sigh of relief, stop complaining, and start figuring out how to improve on something that is basically working.

Which state has the highest hourly rate for lawyers?

The Top 10 States for Lawyer Hourly Rates. Just as it did last year, the District of Columbia has the highest lawyer hourly rate, an average of $380, up 8.4% from 2019, when the average was $348. After D.C., the top jurisdictions are, in order, New York at $357 (+3%), California at $338 (+4.4%), Delaware at $333 (+7.2%) and Nevada at $312 (+1.2%).

What practice areas saw decreases in hourly rates?

Only two practice areas among the top 10 saw decreases in hourly rates: Tax and Civil Rights/Constitutional Law. Other practice areas that logged a dip include Traffic Offenses (-11.7%), Elder Law (-10.4%), Appellate (-8%), Medical Malpractice (-4.1%) and Insurance (-5.1%). Those decreases make sense when you consider how the pandemic influenced supply and demand. Fewer people driving and the serious shutdown of court services made it difficult to generate or push work forward. When the country is able to open up, I suspect those rates will recover.

What is the fifth annual Clio Legal Trends Report?

The fifth annual Clio Legal Trends Report is a fount of information for solos and small firm practitioners when it comes to benchmarking data. I’ll leave the really heavy lifting to others (such as Jared Correia, who dug deep last year in a three-part series ). I’ll focus on one key indicator: lawyer hourly rates.

What states have increased attorney fees?

Attorneys in states with the largest increase in rates include Wyoming at $251, up 9.9% from the previous year, and Iowa at $175, up 9.1% from the previous year. However, one could argue that with such low rates for Iowans with a bar card, there was optimistically no place to go but up.

How to see how your practice area fared against the national average?

You can see how your practice area fared against the national average with this chart by looking at the data on opening new matters. Except for one brief period early in the pandemic, intellectual property consistently beat the national average. Hence, the steady high hourly rates. Meanwhile, family law tracked the national rate quite closely. Tax is down, still well below the national average, hence the drop in the increase in hourly rates.

Is utilization, realization and collection rates included in the data?

I’m going to leave out the latest utilization, realization and collection rates, though they are included in the data . Those are all based on how you manage your business. Again, it’s important to consider how much the pandemic is influencing the stats. More on that later in the post. So, if you even halfway trust this former legal affairs newswoman (liberal arts journalism major with a minor in economics), let’s dig in.

Can attorneys work remotely?

As many professionals learned firsthand that they could work and successfully operate a business remotely, it will be interesting to see how attorneys’ and staff’s relocations impact both state and practice hourly rate data.

Why is a law clerk counted as working hard?

The law clerk is counted as working hard if he or she is recording in a large number of hours, rather than finding a better and quicker way to get the job done . It’s not the skill of the law clerk that is important at this stage.

What is the role of a partner in a law firm?

The role of the partner is to perform solid legal work and to generate work that will create billable hours. He or she also must provide enough work to sustain the junior and senior associates.