Billable Hours are Your Best Friend When Negotiating A New Deal

Billable Hours are Your Best Friend When Negotiating A New Deal

There is nothing so central to a lawyer’s daily life, as the billable hour. This metric wasn’t created for big brother looking over you. Use the billable hour as a powerful tool, remember billing is not the enemy. It’s your salvation.

Billable hours helps improve your time management skills. Focusing on what you are spending your time helps determine where the focus needs to be down the road.

If you aren’t happy with your client base, it may be time to start changing the way you do business. Spending too much time doing pro bono work? You may need to start devoting more time working on client business to generate more billable hours.

Examining your billable hours helps assess your overall profitability. Do the math: if you’re billing out 1900 hours and only getting paid for 1200 hours, you are discounting too much. Firms like a high realization rate, meaning what ever you bill out, you get paid for.

Apply the “One Third Rule” to your billing.

The One Third Rule is a general guideline (each law firm is slightly different) to determine your salary and profitability. The rule states that one third (1/3 ) of the attorney’s gross profit goes to salary; one third (1/3) of the attorney’s book goes to overhead costs; and one third (1/3) of the attorney’s book goes to firm’s profit.

Use this model directionally and make adjustments for your unique situation. By using the one third rule, will determine what your base salary needs to be as well as your compensation.

Technology & Time Management

During the COVID pandemic, many law firms have invested in technology. Beyond remote meetings, technology provides efficiency for attorneys to track billable hours, managing and assembling documents, organizing contracts and legal matters and calendaring.

Technology can also help reduce administrative costs. But most importantly, technology can help better manage time. The investment in technology is well worth the cost. Time saved can easily be devoted to creating more billable work.

Implement Strategies That Maximize Billable Hours
Ways to maximize your law firm’s billable hours.

Breakdown Time In Increments: Ensure that all time spent on legal matters is billed and compensated for. Break it down by five-minute increments.

Record Tasks As You Complete Them: There are several time tracking mobile apps that make it easy to track billable hours. Services must be descriptive and justified. Don’t submit an invoice that doesn’t justify the invoice.

Make Time Tracking Policy: Create a culture that makes tracking billable hours a part of doing business for every member of the firm.

Maximize Productivity: Time spent on nonproductive tasks takes away from billable hours. Purposefully spend time on tasks that are billable.

Limit time each day spent on efforts that are not billable. Delegate less profitable tasks to paralegals or support staff to better manage your time.

Track Billable & Non-Billable Hours: Assess where and how much time each member of the firm devotes on servicing clients. Make necessary changes to maximize efficiencies and tasks for each member of the firm. This will improve time management and at the same time increase profitability.

When the time comes to negotiate a new compensation package, you will be in a better position having restructured how you spend your time. Your earnings will be considerably more, putting in an excellent position to ask for more money when the opportunity presents itself.

Schedule A Consultation

About: On Balance Search Consultants

On Balance offers great insight and industry intelligence. Shari Davidson, president of On Balance Search Consultants, advises experienced attorneys at every stage of their career to take them to the next level. From making the lateral partner move to succession planning.

Shari takes a proactive approach to advising law firms on how to take a firm to the next level and helps rising talent make the transition to the right law firm. On Balance Search identifies opportunities that exist today, not down the road.

Contact us today. Call 516.731.4300 or visit our website at

Please note that the content of this blog does not constitute legal advice and is only intended for the educational purpose of the reader. Please consult your legal counsel for specifics regarding your specific circumstances and the laws in your states pertaining to social media and any legal restrictions regarding the law.

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