Best Practice: How many billable hours should an associate produce?
Asked and Answered
By John W. Olmstead, MBA, Ph.D, CMC
Q. I am a solo attorney in upstate New York. My practice is limited to estate planning, estate administration, and elder law. I have just hired my first associate and am trying to get a sense of the number of billable hours I should expect her to produce. Your comments would be appreciated.
A. For many years the national norm for all firms has been around 1750 billable hours - much higher for litigation firms - often in the 1800-2000+ range. In my experience I find 1650-1700 a good target for most firms. However, I am finding that 1500 is more the norm for estate planning firms such as yours, especially if the attorney is also doing new client intake interviews and meetings. As a general rule attorneys should be billing approximately 70% of their total worked time. Of course this all assumes that you have adequate work to keep you both busy on a full load.
Lexis has published a couple of studies on billable hours that you might find useful - Billable Hours Survey Report, Non-Billable Hours Survey Report and Where Do all the Hours Go
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John W. Olmstead, MBA, Ph.D, CMC,(www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at firstname.lastname@example.org.
Member Comments (4)
At 1700 hours, that's 34 billable hours per week if you use a 50 week year, or 6.9 hours of billable time per day, in a 5 day week. (Adding a sixth day brings the average to 5.67 hours per day.) Assuming things like lunch, restroom breaks, the occasional non-billable activity like professional development, reading Facebook, the occasional holiday like Memorial Day, Labor Day, MLK, etc., how is 1700 hours "reasonable?"
Since when has billable hours for associates ever been reasonable? Its always assumed you will work your butt off as an associate and not have nice vacations or Saturday mornings to yourself.
I am glad that John adjusted his numbers down slightly, particularly in light of your practice and firm size. According to the ALM/NLJ survey, the average hours for partners and associates in 2012 -- the most recent data I could find -- was 1,642 billable hours for partners and 1794 hours for associates. But these numbers are pulled up by large firm hours (where billing targets are higher). So 1500 is probably reasonable if you plan to treat your associate like a large firm associate, focusing on billable work and periodically doing some firm administration and marketing. Realize then, however, that the associate's billable hours will be totally dependent upon how much work you give the associate: if you don't give the associate enough client work, don't expect the associate to bill (unless the associate is just churning client files, which will lead to other problems).
That said, why focus on billable hours? Why not focus on a revenue target, or a targeted number of tasks completed per period (for example, X number of wills completed, etc. per week)? Your goal should be to have a firm that supports the you and the associate in a manner you both consider appropriate -- with your compensation likely being higher, because you have capitalized and are running the firm, developing the clients, and providing the higher-level work -- not simply to have your associate accumulate billable hours.
Finally, I am wondering why your "first associate" is going to be full time. I hired a great young lawyer and am paying him on an hourly basis, an arrangement we both like. I decided to pay this lawyer -- "associate" is in appropriate -- the same per hour amount regardless of whether the work is "billable" or non-billable to clients. This makes my colleague "task neutral." I can have him work on marketing, or firm administration, or client work, and his view is the same - he is never "wasting time on a non-billable matter." And this allows me to have him work on things that are less profitable or best delegated to him, so that I can focus more on things that require my expertise, experience, and/or attention.
Good luck hiring, supervising, and developing your new attorney.
Between 1700 and 1800 is a fair number. But, I would also recommend that included in that estimate, you should be expecting him/her to contribute 30 - 40 of a pro bono time. Marlene Kurilla on 4/25/2015