Ah… the billable hours. A concept that most attorneys will become intimately familiar with at some point in their careers, but remains shrouded in mystery to law students and new associates.
Law students are often intimidated by the billable hour because it isn’t something that most law schools teach. And billing hours is second nature to law firm attorneys, so at some point, they forget that billing hours is a skill.
Read on to learn more about how to bill hours, and scroll down for a billable hours chart.
What are Billable Hours and Why Does it Matter?
Most law students will encounter billable hours for the first time while working at a law firm or possibly for a public interest employer. This is because many public interest employers “bill” or record the time they spend on cases if it is a requirement of grant funding.
But for purposes of this article, we will discuss the billable hour from a law firm perspective. I’d also be remiss if I didn’t note that not all law firms bill hours. For example, firms that are taking matters on contingency likely are not billing hours, at least not in the traditional sense.
So with that background out of the way: the simplest way to explain the importance of the billable hour is to say that it is a law firm’s bread and butter.
Billable Hours: the Law Firm’s Bread and Butter
Most firms enter into engagement agreements with their clients that outline the terms of representation and the billing rate.
This is how law firms make money; they bill their clients for the time that their attorneys, law clerks, and paralegals spend working on client matters.
The rate at which a law firm employee bills will depend on her education and experience. Partners typically bill the most and law clerks and paralegals tend to bill the least.
That said, even law clerks can bring in a substantial hourly rate, billing at upwards of $100 per hour pending the market and practice area.
You might be thinking, “Well, that’s not fair. My firm is billing me out at $125.00 per hour, and I’m only getting paid $20.00 per hour?
If a firm is run efficiently, you are probably right; the partners are making pretty good money on your work.
However, not all firms are run efficiently, not all client pay their bills, and your firm might not actually bill the client for every hour you “billed” (more on that later).
On top of that, the firm has additional overhead, like paying for document review software and its Westlaw account. So the firm might not be making that much money on your after all. And it is highly unlikely the firm is able to bill for you sitting in on a deposition or hearing, so based on your billable rate alone, it’s hard to say whether your hourly rate is “fair.”
How do you Bill Hours at a Law Firm?
There are essentially three components to billing hours:
- The name of the client/the matter;
- The project (i.e., what you worked on); and
- The amount of time you spent.
And that is it! Firms have software to keep track of their billables and invoice their clients. Depending on the firm, you may be responsible for entering that information yourself, or you may give it to someone else who will enter your billables for you.
At most firms, attorneys enter their own billable hours.
Most firms bill in 6-minute increments, but some firms bill in 15. Or the billing increment may vary pending the client/matter.
Billing in 6 Minute Increments & Attorney Billable Hours Chart
6-minute increments are kind of confusing, but the easiest way is to use an attorney billable hours chart to convert your time into increments until you memorize it. See directly below for a billable hours chart and directions.
So how does this work?
Say you spent 3 hours and 45 minutes writing a memorandum for a partner. Just look at the chart and calculate 1.0 for each of the three hours, which would be 3.0. Then add the forty-five minutes, which equals 0.8. So you’d bill your time as 3.8.
Of course, along with the length of time, you’ll enter the name of the client and a description of the work you performed that includes enough details to explain the bill to the client.
Some firms have software that has a built-in timer that will automatically convert your time into 6-minute increments. If you prefer not to use the chart, you might check to see if your firm has that option for tracking your time.
While you are here, check out my new book: The Complete Guide to On-Campus Interviews!
This is a must-read for law students interested in BigLaw. It features,
Insider perspectives about OCI, Pages & pages of interview questions, content from the OCI Success Series, an entire chapter dedicated to FAQs, and much, much more!
What are Unbillable Hours vs Billable Hours?
Unbillable hours are time spent working that cannot be billed to a client. Common examples include attending a networking event or doing some sort of administrative task, like setting an away message on your email account.
Many firms will ask you to keep track of your unbillable time, in addition to your billable hours.
It’s also important to note that you cannot bill a client for time you don’t spend working on their case. For example, if you went out to lunch with some attorneys at the firm, you cannot bill a client for that.
You also can’t bill two clients at the same time.
So imagine you are sitting in Zoom court for one hour waiting for your motion to be called for client A and simultaneously working on a brief for client B. You need to bill one or the other or divide the hour between the clients. You can’t bill both client A and B simultaneously. In other words, you can’t bill 2 hours for the single hour you spent working.
Billable Hours Pitfalls for Law Clerks and New Attorneys
If I had a dime for every time I heard a law student say, “It takes me a really long time to do the work, so I don’t bill for all the time I spend,” I’d have a lot of dimes.
You should not do this.
Well-intentioned students and new attorneys often feel that it is taking them too long to perform a task. So they shave down their hours, so the partner will not think badly of them.
It is very common to feel this way, and you probably are not taking too long.
But when you cut your own hours, you are only hurting yourself and the firm.
You are hurting yourself because having strong billables is one of the ways you can show your value to the firm. Again, billables are a law firm’s bread and butter, so billing honestly is very important.
You are also hurting the firm because when you cut your own hours, the firm loses the ability to bill for that time. Taken to the extreme, some attorneys see this as a form of “theft.” (Please don’t let this freak you out. If you previously cut your own hours because you thought you took too long on a project, it is not going to come back to haunt you. Just be honest going forward.)
If something does take too long, the partner will cut the hours for you. And this doesn’t mean you are doing a bad job.
Partners cut hours for many reasons that have nothing to do with your work or the length of time it took you to do the job. For example, if the partner feels the client’s bill is getting too high for the month, the partner may cut your hours. And this has nothing to do with you.
The best practice is to bill honestly for every minute you spend doing billable work. Keep excellent track of your hours and the assignment, and you will be fine!