This week we welcome guest write Marissa Geannette to talk about an overview of the billable hour.
When I was a law student, I had no idea how law firms operated. One of the biggest mysteries to me was the billable hour. I’d heard that most law firms required their lawyers to track their time, but I didn’t really know what that meant.
If you feel similarly confused, hopefully, this post will make things clearer for you. While it takes a little while to understand the billable hour, with these practical tips, you’ll get the hang of it in no time!
The Basics – What is a Billable Hour?
The billable hour is how a law firm keeps track of how much its lawyers are working. It’s a key metric for law firms for two main reasons.
First, it’s how the firm calculates what to charge (or bill) a client. On a bill to a client, all of the lawyers who worked on a project will be listed, along with the exact amount of time they worked, what they did, and their hourly rate. Based on these numbers, the firm will charge the client for the work its lawyers did.
Second, the billable hour is important because it’s one way lawyers are evaluated. Firms like to know who is working on what, for how many hours, and whether an attorney is on track to bill the required number of hours that year. This requirement varies by firm, but 1,800-2,000 billable hours a year is pretty standard among the big law firms.
Some Practical Tips
As a brand-new lawyer, you will probably be given a brief orientation about how to use your firm’s electronic billing system. Then, it’s up to you to input your time into that system every single day.
How do you do this? Generally speaking, you will be given an assignment and told the name of the client and a matter number. Whenever you work on that assignment, you’ll enter both a description of the work you did and the amount of time (measured in six-minute increments) you spent on that work into the online time recording system.
While everyone develops their own strategy to effectively and efficiently bill their time, here are a few tips to keep in mind as you begin your career:
1. Input your time as you go
There’s nothing worse than looking back on a week and realizing you haven’t input any of your time. You’ve billed lots of hours (meaning, you’ve worked on a lot of client matters), but somehow your time entries are blank!
This happens to the best of us (I still have nightmares about it!), but it’s also preventable, for the most part. Try to make it a habit of entering your time as soon as you complete a task, even if it’s just a brief description that you can go back to later and expand on.
This isn’t always practical, as you’ll often be juggling multiple assignments and running from one thing to the next. But, at the very least, make it a goal to input your time before logging off for the day. It might be the last thing you want to do after a long day, but you’ll thank yourself later when you aren’t scrambling trying to remember what you worked on a week ago.
2. Ask those more senior to you for tips
You might be wondering – what work is considered “billable”? It’s a question a lot of junior lawyers have. Some things are obviously billable work. If you are drafting a motion or sitting in on a client call, those are definitely billable tasks. But what about other things, like a chat with a colleague that turns into a discussion about a matter? Or how about the time spent waiting at your desk late at night for a partner to send you their comments?
One thing you will quickly learn is that some of what to bill is left to your discretion. Everyone has their own practice, and the best way to develop your own practice is to watch what the senior lawyers in your group do.
Just as it’s helpful to use senior law students as resources, think of more senior associates in the same way. Ask them questions, figure out what they do, and follow suit. Soon enough, you’ll develop your own system for tracking and recording your time that also aligns with your group’s norms.
3. Never under-record or discount your time
Now, it goes without saying that you should never inflate your time. That’s basically stealing from a client. But, that’s not the problem most new lawyers face. Many new lawyers run into the opposite issue – cheating themselves, not the client.
As a new lawyer, you might be tempted to discount your time. Let’s say you have an assignment that you spend eight hours on, but you feel like maybe you spent too long. Maybe you end up billing just six hours for it. Don’t do that! It’s not up to you to decide you spent too long on something; that’s your supervisor’s job.
Your supervisor should always know how much time it actually took you to do something. And the only way they can know that is if you honestly record your time. If you get into the habit of shaving off an hour here or there, you’re harming nobody but yourself.
Now You’re Ready to Bill Your Time!
Tracking your time down to the minute is one of the many things new lawyers are surprised by, as it’s very different from how many students operate during law school. But, as long as you stay on top of your time entries and understand how the billable hour works, you’ll adjust to this new way of working in no time!
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