If you’ve ever wondered how law firms generate revenue or how attorneys track their time, the answer lies in billable hours. These are the hours attorneys spend on tasks directly related to a client’s case—such as legal research, drafting documents, trial preparation, or client meetings and communications. Law firms use billable hours to calculate revenue, and many set billable hour targets for their attorneys. However, it’s important to note that not all attorneys charge by the billable hour—some use contingency fees or fixed pricing models. This discussion focuses on those who bill by the hour.
Law firms that charge by the billable hour typically track time in six-minute increments. For example, if an attorney spends 18 minutes drafting a document, they will bill for 0.3 hours. With an hourly rate of $500, that task would generate $150 in revenue. While this system ensures fair compensation for legal work, inefficiencies in time tracking can result in significant lost revenue.
The Hidden Cost of Missed Billable Hours
Even small inefficiencies in time tracking can lead to substantial financial losses. Every missed minute, unoptimized rate, or unpaid invoice adds up—sometimes to the tune of tens of thousands of dollars per year. For instance, increasing your billable practice by just 10% could mean an extra $80,000 annually. And capturing just one additional billable hour per day could add over $125,000 to your bottom line—without requiring you to work longer hours.
For over 30 years, Atticus has developed proven strategies to help attorneys grow their practices, maximize profitability, and build the foundation for long-term success. One key aspect of running a successful law firm is understanding and optimizing our time.
The Rule of 3: A Simple Formula for Profitability
Understanding the “Rule of 3” can unlock profitability for your law firm. This simple yet powerful method measures your firm’s financial health. The Rule of 3 states that the revenue generated by each billable timekeeper should equal three times their salary. Here’s how it breaks down:
- The first portion of revenue covers the attorney’s salary.
- The second portion covers overhead and benefits.
- The third portion represents profit.
By applying this rule, attorneys can calculate their firm’s target revenue per billable hour and determine whether their current rate and productivity levels align with their financial goals. Adjusting billing rates or increasing billable hours in line with this formula can significantly impact profitability.
Billable vs. Non-Billable Hours
In a law firm, not all hours worked are billable. Tasks such as administrative work, marketing, or internal meetings are classified as non-billable. While these activities are essential for the smooth operation of the firm, they are not directly chargeable to clients.
One of the greatest challenges attorneys face is the ingrained habits that undermine efficiency. Whether it’s waiting until the end of the week to enter billing time or constantly checking emails instead of focusing on billable tasks, these habits can hinder productivity and limit potential revenue.
At Atticus, our Advisors and Experts help attorneys identify unproductive habits and replace them with strategies that enhance efficiency. One key strategy is contemporaneous time tracking—logging billable work as it happens. This approach ensures every minute is accurately captured, rather than relying on memory at the end of the week.
By incorporating productive habits into your daily routine, such as planning your day before checking emails or setting clear boundaries for phone calls, you can significantly increase your billable hours and improve the overall financial health of your practice.
Ready to Maximize Your Billable Hours?
Even the most skilled attorneys leave money on the table simply due to inefficient billing practices. If you are ready to capture more revenue without working longer hours, our Level Up Your Billable Practice is for you. This one-day virtual workshop provides proven strategies to optimize your billable hours, improve cash flow, and increase profitability.
Unlock Hidden Revenue and Maximize Your Time
In this workshop, you’ll learn how to level up your skills, boost your income, and finally earn what you’re worth—without increasing your workload. Don’t let inefficiencies in your law firm’s billing process cost you tens of thousands of dollars each year. If you’re ready to transform your practice into a streamlined, highly profitable system, this workshop will give you the tools to succeed.
This workshop is perfect for:
- Solo Practitioners and Small Firm Attorneys who want to maximize their billable hours and increase profitability.
- Mid-Level Attorneys looking to refine their billing practices and capture more revenue without working longer hours.
- Law Firm Owners interested in scaling their practice by optimizing efficiency and cash flow.
- Attorneys in High-Billable-Rate Practices who want to ensure no revenue is slipping through the cracks.
Don’t leave money on the table—start making the most of every hour today.
