Billable Hours

CMC (a reader without a blog) requested I write about billable hours, and BeckyTurtle seconded it. Geez. I don't think I would have chosen this topic on my own.

You guys know, don't you, that it's sort of taboo to ask a practicing lawyer to talk about billable hours? Or maybe it isn't and just feels that way to me. It's like asking someone their salary -- it's a yardstick that I know people will judge me by. Because the truth is I don't bill all that many hours and you guys are immediately going to think I'm a lazy slacker wimp and stop reading me and go off and read someone who's a REAL lawyer. I bill about 35 hours a week. Sometimes more; sometimes less. Today I've billed 7.2 hours so far. I'll be here another hour and a half or so, which will probably get me up to an even 8 billable hours. But I've been here since before 8. I didn't start billing until a bit before 9, if I remember right. I answered emails and tended to administrivia and realized it was admin assistant's day. There was a break in the day for a little party for the admin assistants. There's always some kind of interruptions -- emails from friends, a personal phone call or an errand, gossiping with the staff, lunch, whatever. It takes me about 10 hours to bill 7 to 8 hours.

Billing time isn't much fun. When I summered at BIGLAW and was getting used to it for the first time it made me so anxious. First, their expectations were so high (not for us summers, but for the real associates, which I was trying earnestly to figure out if I wanted to be). Second, it's a really confusing set of pulls. You fumble around on a project feeling like a complete idiot, with time ticking away, and at the end of two and a half hours you've been down half a dozen blind alleys and have half a paragraph of tepid conclusions and realize you don't really understand what you're supposed to be doing anyway. Do you bill that 2.5 hours? On the one hand, great, 2.5 hours, that's a nice big chunk of billable time -- great! I hope this will take me a lot longer to finish up. On the other hand, you realize, someone's going to look at this piece of paper and think, "We've hired us a complete idiot! It took her 2.5 hours to do this simple project, and she's still not finished." Maybe you should only write down 1 hour. But where are you going to get the other 1.5 hours? Stay later? What if while you're trying to catch up you're only slightly less clueless?

You can see how anxiety-producing it all is. My philosophy when I came here was bill everything, honestly and truly, and try to be smart about things but not to try to trick anyone into thinking I'm smarter than I am by cutting my own hours. That can only backfire. And I'm expensive enough to my clients. I'm not going to bill them for time I don't spend working on their matters.

This firm is pretty chill about billable hour requirements. It's one of the reasons I picked them. I can see what everyone bills and there's a pretty broad range; I'm neither at the top or at the bottom.

I didn't focus much when I was a law student on billable hours. I was on the BIGLAW track -- I figured, I'm smart enough to play in the biggest ponds, I don't want to hear the wimps and the naysayers whining about "quality of life." I figured that was silly sour grapes stuff from people who couldn't hack it. Then I got to BIGLAW and I saw how miserable this timing of every minute can make people. Including me.

First off, get out the back of an envelope and let's do some math. You've already multiplied 35 hours x 48 weeks per year (vacation, CLE seminars, holidays, miscellaneous unbillable stuff). That puts us at 1680 hours per year, give or take. Sounds kind of high to me, actually. Okay. At my BIGLAW, there was some confusion about the billable hour requirement. Sometimes I heard that there was "no billable requirement, just a target." I heard 2000 hours as that target, and I also heard 2250 as that target. There was some controversy about whether 2250 was a "target" or a "floor" for getting a bonus. I found the whole thing a little silly, people getting huffy and resentful about a bonus when they were already making salaries that were as big as anything I'd ever seen. But I can understand the desire for some clarity, especially with the life sacrifice these associates were making.

Okay, let's unpack these numbers a little bit. Let's use 2000 hours for THEM and 1600 hours for my life now. That's a difference of 400 hours. Billable hours. Okay. What's that mean? Well, remember, my average is about 35 billable hours per week. And I'm here about 50. 8 to 6 daily, or maybe 8:30 until 7ish, give or take, in the office, M - F. That means a BIGLAW lawyer needs to work the equivalent of more than 11 weeks more than me, just to get to 2000. Or they could make it up with every single Saturday, billing 8 hours. I haven't been tuned into BIGLAW enough to know where 2000 hours falls in the heirarchy, but I have a hunch it's not considered that high.

Okay, so if you're already coming in from 8 - 6, and you've got to squeeze an additional 11 weeks of billable hours into your life, that's a project. That's ambitious. That takes concentration and focus and thinking. You can't just chat with people, bounce ideas around. You can't help someone out with a question they've got on something you can't bill for. You can't go have a leisurely lunch with a friend. If the printer runs out of paper or there's a little birthday party for someone, well, that's time that's going to have to be stolen from something else. And you're already stealing a whole lot of time away from life as it is. It's not that lawyers are born jerks, it's that they've got to come up with these extra 11 weeks of life. And it's not there, really, unless you start taking away ordinary niceties. (To get to 2250, we're talking another 18 weeks of life. Where do you get it?!)

I found myself ready to growl at an assistant one day in my summer at BIGLAW because something, I can't remember what, was taking way way longer than it should, and I was already feeling inefficient that day, and I knew this time spent on the interaction with the assistant was going to be lost, and I didn't know where I would get it back, and I felt this desperate panic -- don't you know that my time is precious?! I wanted to yell at this poor assistant. Wow. I was surprised at the helpless ferocity that overtook me, and I didn't like it at all. It's one of the things that made me realize I could turn into a person I didn't like if I stayed at BIGLAW.

One of my favorite lawyers in town was a partner at BIGLAW in BIGCITY, and recently moved here with his wife and kids for a change of life. One day we were having lunch together and talking about the culture of his old firm. He was a bit of a rising star there, but after three or four years with rave reviews he got called into the managing partner's office, who was looking at his numbers. "I notice that every year, you have billed almost exactly our minimum billable requirement," the managing partner said. My friend had hit the requirement, or just barely exceeded it (like within .7 of an hour) each year. This, apparently, was not looked on with approval. My friend, to his credit, said, "I think my record and my performance here speaks for itself. I only regret that I can't get that extra 2.2 hours of my life back," and stood up and walked out.

I will sell my time for money up to a point, but after that no amount of money is enough to trade my time for. Which is why I'm here, and not there. I have enough money, and I have enough time.

[UPDATE: My friend Blue Rabbit writes about billables from the perspective of growing up as the child of a BIGLAW attorney. Interesting. It's why she's not a lawyer.]

Comments

[Dave!]

Contrary to thinking you a slacker, when I saw how much you billed, I thought "Wow, a *sensible* lawyer who can balance a career and a life. That's pretty inspirational to a law student such as myself...

My wife went through a similar dilemma, which is why she now has her own practice. We have friends at firms here with 2200 and even 2400(!) minimums... that's just unreal.

[Neo Tokyo Times]

This is a great post.

I’m pretty unfamiliar with the entire culture of law, and as a pre-law entering in this fall, these blawgs have been very useful for me to get a better sense of what life as a lawyer might be like.

But the flip side of this education is a persistent and growing anxiety I have over the 80 a week lifestyle these “real lawyers” are putting up with.

I’ve had political jobs that required 80 hour weeks, but they weren’t something that I could keep up with for more than a few months, much less decades.

I like reading about the other options available to lawyer-types, which allow for some time to spend all that money y’all make.

[cmc - an admiring reader without a blog]

Thank you for the wonderful post! Having spent the first few years of my practice in the public sector, I have found it very difficult to learn how to track my time without constant anxiety. Yet, despite the importance of billable hours to both clients and to lawyers, there is very little written about the psychology of billing.

I have always had the confidence that my product is solid. I can write a brief, try a case, negotiate with opposing counsel. But I don't necessarily want to provide my clients or superiors with a window into how labor intensive the process was or how lost I was at various times while producing the brief or preparing the case. When I first started billing, it always felt to me as though my client were in the room with me watching me stumble around.

The key (I think) is to recognize that the blind alleys, or even strategy blunders, are part of the process of getting to the right result, that the process has value, and I deserve to take credit or even be paid for having spent that time (as long as I am honest and accurate in my billing entries.) So it ALL needs to be recorded even if the time is written off.

[Dean F.]

I have not ever been a lawyer, but I have worked most of my career in professional service firms ... mega large, medium large, and micro sized firms (the micro sized I was a founder and co-owner of). Over those years I developed a keen sense of keeping track of my time and billing it. I detested keeping track of my time in all respects. However, that is beside the point, which is this: billing time is generally an insane exercise. It is a math exercise ... that was at one point designed as a cost measurement tool and it morphed into the end all be all for a lot of professional service firms. Ron Baker has an excellent book about value billing or in his words the overthrow of the billable hour. So to hit it clearly, the use of an hour then multipled by a rate derived from who knows what does not equal the value of a result or outcome achieved. And it has so many weaknesses that it amazes me that is has the power it does have ... except for the small fact that it does not favor the consumer as a general rule.

[CB]

Thank you for posting this. Your paragraph about BIGLAW was especially interesting to read. I wish more people had the presence of mind to make these value choices. Even big law firms would be a different place then, I'd suppose.

[wingsandvodka]

Wow. That was pretty awesome. Thank you.

-mike

[Chris]

The minimum hours requirements are very similar between BIGLAW and BIGCONSULTING it seems. In another life when I was working for BIGCONSULTING, our minimum billable hours requirement was 2600 hours/year. In reality, this meant working about 3000 hours or more a year in order to make that minimum (3000 hours is the equivalent of a full time job and a half, 60 hours a week). Bonuses kicked in at 3000 hours/year. If you use the same math, that means you would have to work about 3600 hours to make the bonus cutoff, which is basically two full time jobs (75 - 80 hours a week). When I was confronted with the fact that I was only hitting the minimum number of hours (while billing out at $500 an hour for my company), like your friend, my choice was clear. I have never looked back, but one thing I did get a good feel for is how billable hours relate to "real hours" which is a valuable lesson I do think.

[UCL]

Sorry to parrot everyone else, but what an awesome post.

The reason I love it is that it captures the true spirit of what I think is a growing movement among the "new generation" of associate attorneys who've graduated within the past few years or so. Many of us look at what our colleagues are doing in BIGLAW. Rather than blindly stumbling behind them into the same trap, we're stopping and asking ourselves, "Why?" Increasingly, we're not satisfied with the answers to that question.

[ames]

Thank you so much for posting this! I'm wrapping up my first year, thank goodness. My school has a required course in professionalism, separate from the Legal Ethics course that everyone takes. Our first unit looked at life in BIGFIRM, MEDIUMFIRM, SMALLFIRM, and a couple of other legal areas. I remember being surprised at how long you had to work to bill one hour and how many hours needed to be billed a year, and wondering how in the world I was expected to do that and still have some kind of balance in my life. I'm an older student and worked for ten years before deciding to give law school a go. I liked my life when I was at Big Mutual Fund Company, and while I'm willing to put in the time needed, I fully plan to have a life outside of my job. Posts like that, that demystify billable hours, and really your whole blawg, show me that it is possible.

[ames]

Thank you so much for posting this! I'm wrapping up my first year, thank goodness. My school has a required course in professionalism, separate from the Legal Ethics course that everyone takes. Our first unit looked at life in BIGFIRM, MEDIUMFIRM, SMALLFIRM, and a couple of other legal areas. I remember being surprised at how long you had to work to bill one hour and how many hours needed to be billed a year, and wondering how in the world I was expected to do that and still have some kind of balance in my life. I'm an older student and worked for ten years before deciding to give law school a go. I liked my life when I was at Big Mutual Fund Company, and while I'm willing to put in the time needed, I fully plan to have a life outside of my job. Posts like that, that demystify billable hours, and really your whole blawg, show me that it is possible.

[Notorious JFK]

You know they are going to fire you if you don't hit the 2000 hours, right?

[David Giacalone]

Thank you, Scheherazade for doing what you do so well. Unlike my weblog, it's great that you reach lots of law students and newbie lawyers at a time when they might be able to save themselves.

I've written on the perils of the billable hour at ethicalEsq, of course (and I believe lawyers will find a way to exploit any billing system, while making life miserable for themselves as well). Please pardon my suggesting further reading. In her article The Hours, Niki Kuckes provides a tart and pithy history of the billable hour (it was not used much before 1950). The legal profession quickly turned it into an efficient machine for producing higher income and an inefficient mechanism for providing legal services.

Last month, I suggested that it might be time to start disciplining law firm management for creating ethically hostile work environments. In researching that piece, I discovered a document from the ABA's Ad Hoc Committee on Billable Hours called the Model Diet of billable hours for associates. It is meant as a "best practices" summary for law firms -- "that ensures a level of billable and non-billable activity to serve not only the interests of an acceptable level of productivity given the firm's reasonable profitability aspirations, but also other important objectives."

Here's the scary part -- the Model Diet is based on "2300 Creditable Hours for Lawyers" per year. The profession's "leaders," after thoroughly studying the problems surrounding law firm demands for excessive billable hours, somehow concluded that 2300 hours is "significant" but "manageable":

The model reflects an assumption that law firm associates are willing to work hard, that the profession is demanding, but that it provides great rewards, not only monetarily but also through the challenge and stimulation of work for paying clients as well as the other activities reflected in the model. The total is, at the same time, manageable -- it represents less than 50 hours of recorded, professional time, billable and non-billable per week, allowing for vacation, holidays, etc. We do not view that as an unrealistic burden for incentivized, enthusiastic, hard-working associates who enjoy what they do. Indeed, the allocations suggested for all types of work -- billable and non-billable -- are designed to provide a varied set of challenges and to enhance the psychic rewards of the practice.

I'm not making this stuff up. Welcome to the legal profession.

[TPB, Esq.]

When my dad passed the bar, twenty-nine years ago, he took a job with one of the biggest, if not the biggest, Biglaw firms in New York. He lasted 11 months. The billable hours routine was killing him, and hurting his relationship with my mother, who had just given birth to me. He left for the government in order to have a life, by which I don't mean just the social elements of a life. I mean the quality of life that lets someone be a family man and still be an advocate.

When I went to work for a Biglaw firm three years ago, he did everything he could to discourage me from that, and, honestly, he was right. The sacrifices I made at the firm were too great. Not just in time spent there, but the sacrifices of self.

David, if that's the ethical guidepost, then it is understandable why so many lawyers are unethical when it comes to billing.

[James]

At the biggest firms in NYC the min is 2400 hours. I'm not sure how strictly its enforced
though b/c I have some 1st and 2nd yr associates
who haven't hit it yet.

[JBishop]

I've been reading more and more about firms switching to task based billing as opposed to the billable hour or a combination of both.

With the advances in legal software and database management tasks that used to take 30 minutes to an hour to draft can now be accomplished within minutes. However, instead of billing the client for 5 minutes of work they are billed on a preset price for the completed task. This gives the attorney an additional 25-55 minutes to work on other client issues.

Has anyone here started using this method of billing/timekeeping and how has it worked out for you reaching your required hours in a more sane manner?

[David Giacalone]

Hello, JBishop. I recently discussed some of the issues raised by using alternatives to hourly billing, in a post called Value Billing or Venal Bilking, which includes quite a few links (and some ideas) that you might find helpful and/or interesting.

[NZ lawyer]

I am a corporate lawyer in New Zealand. Looking in from the outside, I think that there are two aspects to this issue, billable hours as a billing system, and billable hours 'targets' in the US.

1) The system

As with the majority of the common law world, NZ legal practice is dominated by billable hours.

As an intermediate solicitor (associate), I have often criticised the negative elements of pure billable hours focus (for example, billing per hour encourages inefficiency and unethical behaviour). Spend enough time as a lawyer and the focus almost becomes an obsession (ie, you know you are in trouble when you begin to think in terms of billable units).

However, I find it difficult to think of an easy replacement. I am often called upon to give fee estimates for particular instructions. While fee estimates may be possible for routine services (eg, real estate work etc), corporate/commercial work and presumably litigation is far more difficult to accurately estimate. As such, it would be very difficult to do this type of work on a flat fee basis.

Value billing is often suggested as a good alternative, yet I think that this is also problematic. If my firm works on a big merger/acquisition and that acquisition is succesful it is easy to point toward the 'gain' for the client. However, if we have advised on a corporate compliance issues, or have reviewed a simple agreement it is more difficult to find added value for the client (but we still want to be paid!)

I note that some junior associates/law students have expressed difficulty with the fact that a partner may review the number of hours spent on a matter and believe it is excessive. I must admit that I shared a similar anxiety. However, I quickly came to learn that partners are busy busy busy people, they do not have time to work through billing sheets to look at a breakdown of the units billed by each individual. My advice: bill everything, even if it seems excessive. You are not expected to be able to do everything fast. If a partner feels that the bill is over the limit, he/she will write it down, if not you are one step closer to your target.

2) US targets

As noted above, I work in the corporate dept of a top-tier NZ law firm (the local equivalent of a Cravath/Sullivan & Cromwell etc). The firm has about 250 lawyers, which may be small in absolute terms when compared with US firms, however in relative terms it is huge (as a crude equation, the US has 70 times as many people as NZ, if my law firm was 70 times bigger it would employ 17,500 lawyers). We work on similar work to corporate firms worldwide - ie large scale M&A, securities work, complex litigation etc. However, my billable hours target is 1600 hours.

This makes a huge difference. I can work 8.30 - 6.30 on a steady basis, make budget, go home and have a life. I have, (when deals are being negotiated, or nearing completion) worked long, long, long hours - but that is not the norm.

My target is not unusual on a global scale. I am not sure about Australian law firms, however, I know that the so-called 'magic circle' firms in London set targets of around 1700 hours.

The extreme targets seem to be uniquely American. Yet, there is a flip side. In both absolute, and relative terms, a first year NY associate makes more than all but the most senior associates in NZ. I am paid very well in local terms, yet I am paid peanuts on a NY scale.

I am not suggesting that everyone come work in the UK or NZ, however, I am suggesting that the issue may not be with billable hours itself, but rather the extreme targets set by US firms.

[Hugh G Rection]

US law firms in London that pay NYC rates have a hard time convincing good associates to join, since no one wants their target to go from 1600 to 2,100 or whatever it is.

There is a propaganda war that reflects this. UK firms promote the view that US firms in London take all your time and force early specialisation, in return for short-term monetary advantage. The US firms say they work no harder than their English counterparts.

Who is right? Who cares? They are all cvnts.

[Cori]

Just FYI, there is a free online service that will track your billable hours for you called XPunch. I won't go into the specifics since anyone interested in more information on this item can find it at http://xpunch.com

It will allow you to find out precisely the ratio of time that you spend doing billable tasks versus non-billable.

PS: I don't work for the company or anything, I just use their product and find it to be great. I also use it for my emmployee's work schedules, too.

[whigrose]

Does anyone out there have any advice on places to go to avoid high billable requirements? I just finished up one year of a state court clerkship. I'll probably put in one more year, but I'm beginning to check out my options now so I don't get stuck with a 70-80 hour work week.

I know government work would be a good option. But there just don't seem to be any openings on the federal side. And unfortunately, in GA, state pay is just a little too low, I'd say about $5-10,000 below federal.

I'd also consider going to work for a small law firm. That would be ideal in a way, keeping me from having to drive into Atlanta which would waste time. I figure, if I have to drive 3 hours a day (round-trip) just to have a government job, then maybe it would be worth it just to go into a small firm where the commute is only 30-40 minutes a day. But I'm having trouble finding information on billables in small firms specifically. Is it really that much better?

Any advice would be appreciated. Though my judges allow clerks to work as long as they want, as a matter of economic reality, I can't stay in a job paying $40k with $70k in law school loans to repay. At least not if I ever want to be able to buy a house, have children, etc. And believe me, I do want those things.

Any advice would be greatly appreciated. I'm pretty lost here...

[A. Rickey]

I love the fact that this entry still does so well in Google: more people need to read it.

To the commentators who have made comparisons to other common law jurisdictions, there is one major distinction between the US and UK: we have law schools, and the English treat law as an undergraduate degree. The English don't graduate their lawyers with massive debts to repay their law schools.

The extra 11 hours per week that our hostess complains about? Much of that--and the extra pay--go into the pockets of law professors. Who in turn make much more money than other professors because of the professional cartel system.

The U.S. is long overdue for a Clementi Report. I have a feeling, however, that I will have long since retired before any such report comes into existence.

[Andy Fox]

I read some interesting history about billable hours. (Sorry, I don't have the link). Anyway, when the ABA studied billing by the hour in 1958, it recommended 1300 hours per year as a solid, reasonable amount of hours. On another website I read that by the late 1960s, lawyers were billing around 1600 per year. Now 2000+? It is insane. That's why when I was in law school I didn't try to be in the top, because I knew I didn't want to work that hard. Do I make as much as a partner in a big firm? No, but then I am not working the equivalent of two jobs. A carpenter can make a ton of money working 80 hours per week too.

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