This means that some lawyers are working anywhere from 70 to 80 hours per week every week just to meet their billable hour minimums which can range between and hours a year. When it comes to billable hours, the failure to properly track lawyer work hours can result in wasted time and lost productivity. 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 and associates to see at-a-glance how much of their time is spent on specific tasks and billable hours. 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.
No human being can work non-stop, not even talented and driven super lawyers who are passionate about practicing law.
Law firms must take into account:. 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.
For law firms that want to make sure that their billable to non-billable time is profitable, maximizing billable time is critical. According to the National Association for Law Placement , the average number of billable hours required from a first-year associate is 1, hours for the latest year listed, which is But the average number of billable hours required for first-year associates at firms with more than attorneys is 1, hours.
And those salaries at big law are sweeter than ever. Other big law firms followed suit so that most now meet that pay while the rest follow pretty tightly under that figure. Of course, there is a cost to the associates. Many firms no longer have the option to wait the entire year to determine whether or not an associate will make his billable hours requirement. If within three to six months the associate is not on track, s he may be let go.
Another consequence of the high salaries is that the economy will likely drop demand at some point, which will leave a glut of highly paid young attorneys. At that point, layoffs become inevitable. Midsize and small law firms pretty much have the same issues with pay scales and billable hours but on a less dramatic stage and the cast of characters. Yale Law developed a chart that gave reasonable amounts of actual time spent for 1, billable hours and 2, billable hours. The second option would give an attorney 1, billable hours with a total of 2, have actually worked.
To achieve 2, billable hours, an associate would work from a. So add another Saturday for 10 months. That gives the attorney 2, billable hours. The attorney will have worked 3, hours. This schedule seems daunting. But this leads to the question, how long can a body keep up this schedule? Adam Pascarella, in an article offering advice to junior associates , listed determining your goals as the first order of business when deciding to work for big law. Automated cost reports, profitability estimates, easy and accurate scheduling based on data.
These are the things that separate an organized and streamlined practice from a firm that is barely surviving.
Management tools that are AI powered can be beneficial in the long run, managing to see what projects, services, and clients are the most profitable or costly. Allowing executives and upper management to make better decisions for the future of the business. People do not often dedicate the time and importance needed when setting prices. This is the heart of the operation, and even more so when managing a professional service business.
A simple rule would be to set the hourly rate for any of your billable hours, track and record said hours, sum them up, multiply them by your rate while adding any extra tax or expense and bingo! If only it was that simple. The fact remains that the main cost of production for legal services is the time employees spend working cases.
And there needs to be differentiated data sets showing how those hours are spent. In order to really know the profitability a firm can achieve, you need a reliable time tracking tool in order to understand where the costs of the business are coming from. With time tracking estimation features, this problem is solved, since an employee only needs to make small modifications before submitting their timesheet. This translates to a more accurate representation of the efforts the talent provides every day.
Maybe meetings tend to run longer in the morning, knowing this allows management to change them to the afternoon. Maybe administrative tasks are eating up way too many hours, and it would be more cost effective to hire an assistant.
These types of changes can also improve the working environment for employees, allowing them to more easily reach their required billable hours, once the process has been streamlined. Letting them do their skilled legal work in a better run firm. A good metric for this industry is the employee utilization rate. This is not meant to scare employees into burnout, but to better comprehend how things are run, and how the numbers accompany that narrative.
Employee utilization EU rates is the best metric for knowing the productivity of a business. The calculation looks like this:.
Calculating EU can help determine if the problems the firm is facing are an internal force, maybe a non optimal workflow, or if they are born somewhere else. Data is the way forward into a better and more profitable firm. So when legal firms set their targets for billable hours they consider their profitability and bottom line.
But not every firm takes into account the extreme demands an attorney must follow to stay in their target billable hour. And this is extremely bad for business, because it translates into poor attrition rates, and attrition is extremely costly. In the Bureau of Labor Statistics, explained that the average employee turnover rate was Among the listed reasons for departure, many listed poor work quality standards, poor productivity, headhunting from other firms with better benefits, and the pursuit of a better work-life balance.
High attrition rates impact the business in a very negative way. While what constitutes client-related tasks may vary from business to business, these are some of the main work obligations that small businesses and freelancers should consider billable:. Sometimes it can be difficult for a company to determine whether the time spent on a specific task is billable to a client. Here are some questions you can ask yourself to help evaluate whether you can bill your client for a certain task:.
Do some research and make sure your target salary is in line with what other businesses offering similar services earn. Once you have a salary in mind, divide it by the number of working hours in a year, which is 2, hours for a full-time job.
This varies from industry to, for example architects have a number of different ways to bill for their time. Among small businesses and freelancers, a monthly billing cycle is most common, with invoices going out on the last day of each month. You can do that manually, by setting up a spreadsheet with separate columns for the client name, a description of the work performed, the date and the time spent working on the project.
Because developing a manual time log can be cumbersome, you can also track your billable hours digitally. If you use a cloud-based accounting solution, you can easily track your billable hours using its time-tracking feature.
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