Have you ever wondered why your supervisor makes such a big deal about your billable time entries? It’s not just about keeping you busy. It’s about keeping the law firm’s doors open.
That’s not me being overdramatic! Please stick with me.
In most law firms, unless you work for a plaintiff firm, billable hours are the lifeblood that keeps the doors open, pays your salaries, and pays the bills. Yet for many legal professionals, being told to track billable time can feel like a tedious chore that takes away from the “real work” that has to get done.
I want to pull back the curtain on why law firms track billable time so closely and why understanding this simple truth can be the key to accelerating your legal career. Whether you’re a brand-new paralegal, a junior associate, or a seasoned legal support professional, mastering the art of billable hours isn’t just about meeting a quota.
If you work at a law firm with a billable hour requirement, this is part of your job responsibilities, not just an afterthought when everything else is off your plate.
Let’s start with the basics. Because I also have many people who listen who are still in school or recent paralegal school graduates who didn’t hear much about billable hours in school.
If you’re brand new to the legal profession, you’ll want to start here and read Everything You Need to Know About Billable Hours.
What are billable hours?
Billable hours are the measurement of time that law firms use to charge clients for the work performed on their behalf. In a typical legal environment, almost every task a paralegal or attorney performs for a client counts as billable time.
Those are tasks like:
- Drafting pleadings and correspondence
- Research and analysis
- Negotiating settlements
- Court appearances
- Reviewing client documents
This time is (or should be) meticulously tracked, usually in increments of six minutes (or 0.1 of an hour), to ensure that clients are billed accurately.
The purpose of billable hours is simple: it’s how law firms generate revenue. Without billing their time, firms would have no way to charge for their services. This system allows firms to tie compensation directly to the effort expended on a client’s matter, creating a transparent (and often intense) business model.
Yes, one could argue that there are other ways to bill clients and that it is working for some firms, depending on the type of work they do. For example, there are flat-fee or fixed-fee models where a law firm bills a client a fee based on the type of project rather than an hourly basis. They still have to estimate how much time those types of projects will take or they risk not being profitable.
Those practice areas include:
- Immigration
- Wills and estates
- Bankruptcy
- Intellectual property (like trademark applications)
- And more
Understanding which activities qualify as billable is crucial to maximizing your billable time and meeting your firm’s expectations. For a deeper dive into what is billable vs. non-billable hours, read Everything You Need to Know About Billable Hours.
I think it’s important for those who are new to the legal industry to understand “the why” of billable hours. I know that it helped me. I remember when I first started out as a paralegal in the early 90s, and it was this abstract thing. They didn’t really talk much about it at school. They didn’t really talk much about it in the firm’s orientation.
As a new paralegal, I would enter billable hours when I thought of it. No one ever sat me down in those early years and told me why I should care. So let’s talk about the why.
Billable Hour Boot Camp
The billable hour course and coaching program to help law firm timekeepers:
✅ Exceed their annual billable targets
✅ Reduce their stress related to billable hours
✅ Write better time entries and reduce write-offs
✅ Get more work done in less time so that they have a better work/life balance
This training program is available as an online self-paced course or a live workshop customized for your team.
Why law firms rely on billable hours
Law firms operate as businesses, and like any business, they must generate revenue to survive and thrive. Billable hours are the primary way law firms do that. Unlike retail businesses that sell physical products, law firms sell a service: their time. Every hour (or minute) spent working on a client matter is the product being delivered.
Revenue from billable hours isn’t just paying salaries. It also covers the law firm’s overhead expenses. Those are things like office rent, employee benefits, technology tools, insurance, and office supplies. Plus, a portion must generate a profit for the partners who own the firm. Without consistently tracking and billing for their time, a law firm would not be able to stay financially viable.
Billable hours also serve as a performance metric. Management uses billable hours to measure whether the firm, or more specifically a department or team, has enough work or needs additional staffing.
For example, when I was a paralegal manager, if I had a partner come to me from let’s say the real estate team and say that they wanted to hire another real estate paralegal. I’d run the numbers and look at their team’s utilization numbers. Paralegal utilization is the percentage of billable hours that are being entered into the billing system compared to the target number of hours.
If that team had 3 paralegals who were all billing around 100 hours per month and the goal was 125 hours per month, their utilization number would be 80%. That means that all three of them have 20% capacity for more work. Why would we be hiring a fourth paralegal on that team when the three who were on the team, at least according to the numbers, didn’t have enough work.
What it means for your career growth
Understanding the importance of billable hours isn’t just about doing a good job for your employer. It’s about strategically positioning yourself for long-term career growth. In most law firms, your billable hours are viewed as a clear, objective measure of your value to the firm.
When you consistently meet or exceed your billable hour expectations, you show that you are contributing to the firm’s bottom line. This gives you an advantage. This is a positive thing! You’re not an expense. You can actually show – here’s how much revenue I’ve brought in this year.
This can lead to higher bonuses and raises. 🎉🎉
Some firms offer tiered bonuses, meaning the more you bill over your required minimum, the larger your bonus. Others might offer discretionary bonuses that consider billable hours one of many factors. Either way, consistently high billable numbers often translate into higher earnings.
🎯 Knowing all this, let’s shift your mindset about billable hours to help you hit your billable hour target.
How to shift your mindset when you track billable time
For many paralegals, the thought of billable hours can feel like a dark cloud hanging over their heads. But what if you could reframe the way you think about billing your time and actually use it as a tool for empowerment and growth?
First, recognize that tracking your time isn’t just about oversight; it’s about opportunity. Every six-minute increment you bill helps the firm; it also helps build your professional reputation, demonstrate your value, and create a track record of reliability.
👉 One mindset shift that can be powerful is to view your billable hours like deposits into your “career bank account.”
Every properly billed hour strengthens your professional standing and moves you one step closer to promotions, bonuses, and long-term security.
Want to take a deeper dive into a mindset shift? Get the Key Strategies to Change Your Mindset About Your Billable Time.
Another key shift is to stop seeing time tracking as a “gotcha” tool used by management, and start seeing it as a personal management tool. Recording your time as you work, being detailed in your descriptions, and consistently hitting your targets can give you a sense of control and pride in your daily accomplishments.
If you’re ready to build a healthier relationship with your billable hours, start small. Set micro-goals each day, celebrate small wins, and use your time entries as a real-time success tracker rather than a burden.
Billable hours aren’t just a number on a spreadsheet. They’re a powerful tool that can fuel your legal career if you know how to use them. Understanding why law firms need you to track billable time, and shifting your mindset to see it as an opportunity instead of a burden, positions you as a valuable and indispensable team member.
Remember, each time entry you record isn’t just about the work you did. It can be yet another way for you to demonstrate the value that you bring to your firm’s bottom line. Is it the only way? Absolutely not. But it’s a powerful one for sure. And it’s one that not everyone has – so consider whether it could be a positive thing for you.
Meet the Author
Ann Pearson is the Founder of the Paralegal Boot Camp, and host of the Paralegals on Fire! Podcast Show, and passionate about promoting the paralegal profession.
Ann spent 20 years working as a paralegal manager and a litigation paralegal before opening the Paralegal Boot Camp in 2010.
Ann’s training programs focus on adding immediate value to a paralegal’s career and bridging the gap between what a paralegal learns in school and what they actually do on the job.
Visit the About Us Page to learn more about why Ann started the Paralegal Boot Camp.
