No wonder so many lawyers in this country work long hours to meet productivity goals. A recent billing trends report finds lawyers spend only 29 percent of each workday on billable time.
That’s only 2.3 hours of billable time for each eight-hour workday, according to the second annual Legal Trends Report, which was prepared and made public today by Clio, a Canadian company that provides cloud-based practice management for firms. The report includes data analysis and also the results of a survey of legal professionals and consumers.
The report, based on data from more than 60,000 paying Clio users that include U.S. firms of all sizes, also found an 82 percent realization rate, which is the percentage of billable hours that are invoiced, and an 86 percent collection rate, which is the percent of billed work that is paid. That means the average lawyer collects only 1.6 hours of billable time from each workday, according to the report.
Considering lawyers only spend 29 percent of their time on billable hours, what else are they doing during those long hours at the firm? According to a survey of 2,915 U.S. legal professionals, including some who use Clio, the lawyers devote 48 percent of the rest of their time on administrative tasks, such as office administration, generating and sending bills, configuring technology and collections, and 16 percent on licensing and continuing education. They spend another third of their time on rainmaking, according to the survey.
While already spending 33 percent of their non-billable time on business development, 41 percent of the lawyers who participated in the survey would spend more time on it if they could.
Lawyers aren’t as productive as they want to be in part because of interruptions, the report notes. More than two-thirds of legal professionals agree there is not enough time in the day, and 28 percent said they struggle to keep track of tasks and deadlines. Also, 25 percent of legal professionals are interrupted more than 10 times a day, according to the survey.
The report suggests that firms need to use billing targets to be most effective, since only 54 percent of legal professionals can estimate their annual billings. Only 40 percent of firms that track time have hourly billing requirements, and only half use a budget to bill a matter.
Hourly billing remains the most common form of billing, although more than half of work in certain specialties, such as traffic, immigration and criminal defense, are more likely to be a flat fee than hourly.
The billing rates charged by firms have changed little from last year, which was the first year of the Legal Trends Report. But hourly rates are increasing more for urban lawyers than rural lawyers.
The report shows the following average billing rates for lawyers in 10 large metropolitan areas: $344/hour in New York City, $323 in Los Angeles, $312 in Chicago, $310 in Miami, $304 in Washington, D.C., $300 in Dallas, $293 in Atlanta, $287 in Boston, $276 in Houston and $245 in Philadelphia.
On the other side of the business equation, the Clio team also surveyed 2,022 consumers about hiring lawyers. The potential clients have strong ideas of what makes them choose a lawyer, with responding quickly to emails or telephone calls a big factor for 67 percent of them. In addition, 64 percent of potential clients want a free initial consultation, 47 percent want a fixed fee, 28 percent want to pay by credit card, 27 percent want a lawyer who will text them to communicate and 19 percent want a “great-looking” website.
A total of 62 percent of the consumers surveyed said they would seek a referral from family or a friend for a lawyer, while only 6 percent would contact a lawyer they learned about on a billboard.
About 19 percent of millennial consumers who participated in the survey said they would prefer to communicate with their lawyer via text or email, 30 percent said they want to share documents with their lawyers electronically, 18 percent want to pay online and 24 percent want to use a credit card.
George Psiharis, vice president of business operations at Clio in Vancouver, said they decided to survey legal professionals on how they were really using their time after they found that they were spending an average of only 29 percent of their time on billable hours. He also said he found it interesting that consumers are much more interested in hiring a lawyer who communicates than a lawyer with an impressive-looking website. He said that piece of information may help firms decide where to focus resources when examining business development strategies.