Florida lawyers bill at higher hourly rates than attorneys in most of the country, especially when the cost of living is taken into account. But compared to the national average, fewer of those billable hours get applied to actual invoices, according to a legal trends report.
The average hourly billing rate for lawyers in Florida in 2016 was $279, making it seventh among 49 states, according to The 2017 Legal Trends Report produced by legal practice management platform Clio. When the cost of living is taken into account, Florida billing rates ranked third highest. Nevada was first in both categories.
According to the report, the average hourly rate for lawyers in Miami was $310, placing the city behind such cities as New York ($344) and Los Angeles ($323), but ahead of Washington D.C. ($304). Overall, urban lawyers made 25 percent more than rural lawyers in 2016.
Yet the realization rate, the amount of billable time worked that actually gets invoiced to a client, was just 75 percent for Florida firms—seven percentage points lower than the realization rate for law firms nationally, according to Clio. Realization rates are calculated by dividing the number of hours billed by the number of total billable hours worked.
“What we found is that lawyers will work a certain number of billable hours but only apply so many of those hours to an actual invoice,” said Clio Vice President of Business Operations George Psiharis. “In the case of this year’s report, we see that law firms only realize 82 percent of hours worked on average [nationwide]. We can’t say for sure why this is, but it suggests that lawyers aren’t invoicing the full value of the time they work.”
Moreover, the report also found that Florida lawyers spent slightly less of their workday on billable hours than lawyers in more than half of the cities included in the report. Florida averaged 28 percent of a day’s work spent on billable hours, which was just under the national average of 29 percent.
It’s in this area—how much of an eight-hour day is put toward billable work—that law firms have the most potential for improvement, according to the report. Such office tasks as administration, generating bills, configuring technology and collections eat away 48 percent of the rest of lawyers’ time, and about 33 percent of work time goes toward business development.
In compiling the report, Clio used data from more than 60,000 Clio users and surveys of nearly 3,000 legal professionals and 2,000 consumers. The sizes of the law firms varied.
Of the hours actually billed, 86 percent on average is actually collected. Specific practice areas such as criminal law, family law, civil rights and immigration law have lower collection rates. The report also found that despite growing discussion of flat fees and other alternative billing structures, the proportion of flat fee billings has hovered between 14 and 19 percent since 2013. However, some practice areas have significantly higher rates of flat fee billings, including the handling of traffic offenses (90 percent), immigration issues (72 percent) and criminal law (59 percent).
For the first time, the report estimated the average value of cases based on practice area. However, the analysis doesn’t take into account expenses for each case, so it’s an overall measure of expected revenue, not of profitability, Clio noted. More importantly, the report said that while the size of the firms involved in the study varied, the nationwide aspect of the study may not present a complete picture of a market or practice.
“What’s interesting to see across all practice areas is that the majority of cases are worth less than the average for each practice area,” Psiharis said. “This suggests that law firms often rely on a small number of cases for the bulk of their revenue.”
Insurance, civil litigation and construction cases had the highest case values, according to the report. The top ten percent of insurance cases in the report brought in more than $9,900 in revenue, but half of the insurance cases brought in less than $1,868.
The top 10 percent of civil litigation cases in the report brought in more than $9,375, and in construction that portion brought in more than $9,189. But in both practice areas, half of all cases in that area brought in less than about $1,300. The bottom 10 percent brought in less than $300.
To calculate the value of a case, researchers looked at the number of cases that had opened and closed over a period of time, and divided by the amount of revenue.
Contact Monika Gonzalez Mesa at email@example.com. On Twitter: @MonikaMesa