Billable Hours Matter More Than You Think They Do
I thought, since I talked about billable time entries last week, then it might be a good time to take a deeper dive into billable hours this week. Well, let’s call it billable hours from a management perspective.
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Why Do Billable Hours Matter to a Paralegal?
Because your billable hours matter more than you think. If no one else is going to talk about it and tell you the cold, hard truth, then I will. Ok, don’t shoot the messenger though. I want to give you the knowledge I wish I had back when I was a paralegal to help you fast-track your paralegal career.
And I’m telling you, one way to fast-track your paralegal career is to exceed that billable hour goal year in and year out.
One way to put your job at risk: consistently not meeting or even coming close to that billable hour goal year in and year out.
Now, I touched on it briefly in my previous blog, but given the feedback that I received, I think I need to go deeper on this topic.
Your billable hours matter more than you think (not just because you might not be eligible for a bonus when you don’t hit that annual target). They matter because of your job security and your salary. So, let’s unpack that.
Before I do that, I want to make sure you stick around for this whole article because this is super important.
If you’re like many people reading, you might be thinking, “This doesn’t really apply to me because I work at a law firm that’s super chill about billable hours. They tell us they’d ‘like’ us to bill 1,200 hours per year, but none of us ever hit that number and no one’s been fired for that reason.”
You should still read this article because unless you’re planning to retire in the next year or two, billable hours (or the lack of them) could impact your career in the future.
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How?
First, it’s probably already impacting you in your paycheck and you don’t even know it. I say this because I don’t know many firms, regardless of their size, that can afford to pay paralegals at or above market rates when that paralegal is billing less than 1,500 hours per year.
I’ve been running those numbers for 20 years. So, when I walk into a law firm or I’m on Zoom doing my billable hour training and they tell me that their annual target number is 1,200 hours, then I immediately know one of two things to be true:
- Either those paralegals are on the low end of any paralegal salary range; or
- If they’re making good money, then the firm is losing thousands (if not hundreds of thousands) of dollars every year on those paralegals.
Maybe you’re lucky enough to be in situation number 2. Good for you! But it won’t last long. Let me explain.
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Law Firms are Businesses
Your law firm is a business entity. When that business entity comes on hard times, the first thing they’re going to do is what every single business entity in that situation does: look to cut expenses.
It’s natural for any business to do that. It’s a business decision.
You know who they’re not cutting? The paralegal down the hall who’s not an expense because she’s billing 1,500 hours per year and is profitable to the firm. She’s generating enough revenue to cover all of her direct overhead, plus contributing to other firm overhead, and is a profit center for the firm. She’s got job security.
Okay, I know that might ruffle some feathers with a statement like that – but please hear me out.
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I’m telling you this because no one else is saying it out loud. It’s like the dirty little secret or something. Well, unless you work at a large law firm because they’re usually a little stricter with meeting billable hour goals and they don’t let it go for that long with low billables. They address it throughout the year instead of waiting until the end of the year and hoping for the best.
One other thing I’d add about your salary being affected by your billable hours is the other end of the spectrum. Let’s say you’re the paralegal who is consistently exceeding that annual billable hour target. Forget about bonuses, because not all firms give bonuses for hitting the target, but even if it’s not a bonus, it can have an impact on your salary.
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How Billable Hours Make a Difference
As a paralegal manager, it was SO MUCH easier for me to get a larger than-normal raise for a paralegal who had high billable hours. Now it wasn’t just a numbers game. I’d run the profitability numbers, which include realization and productivity. I’d have it all in a spreadsheet and be able to go to the CFO and justify why paralegal X should get a 5% raise instead of the standard 2%. Three percent doesn’t seem like much of a difference, but add that up over a few years, because it’s not just the one-time raise. It’s that next year’s 5-6% raise is off the the higher salary.
Let’s say you’ve got two paralegals who both have the same level of experience, education, etc. and they’re both starting at the firm at the same time and their starting salaries are $70,000.
At the end of year one Paralegal A gets a 5% raise, based in part on exceeding their billable hours. Notice I said, “in part.” That’s because the raise also depends on that paralegals’ performance reviews from the attorneys.
So now Paralegal A is making $73,500.
Paralegal B only gets the standard 2% raise and is now making $71,400.
The next year, the same thing happened.
After Paralegal A’s raise, she is making $77,175.
Paralegal B is now making $72,828.
Look, I can go on for another year or two with those calculations, but you get my point. At the end of year 2, Paralegal A is already making almost $5,000 more than Paralegal B. What do you think the gap is going to be at the end of year 5?
You might be thinking, “well, wait a minute, Ann! I don’t have any control over the amount of billable work that the attorneys give me.”
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I’m sorry to have to say this, but you do. I see it every single day and have been seeing it for decades. There are absolutely things that you can do to increase the amount of billable work that you receive from the attorneys.
I’ll never forget when I first started as a paralegal manager. My first month was spent trying to get to the bottom of why none of the 14 paralegals were meeting their annual billable hour target. When I’d sit down to talk to them, they all said the same thing. I don’t have any control over it. I do the work they give me. I send them an email when I’m slow. There’s nothing else I can do.
So I went to speak to each of the attorneys on those teams. Do you know what they said?
They said things like Every time I give him a project, the final product is riddled with errors, so I only use him for last-minute emergencies when no one else is available.
Or they’d say: Do you want to see the last email I received from her? I can’t have her communicate with the client after I receive stuff like this.
Do you know what they didn’t say?
They didn’t say work was slow right now and they didn’t have any billable work to give the paralegal.
I truly hope that you know I am only talking about this because I want to give you the inside scoop to help you. I want you to know these things that maybe someone at your firm should be talking about but isn’t.
How to Get More Billable Projects
I think I was inspired a little bit for this article after interviewing Molly McGrath a few weeks ago about taking the risk of having courageous conversations. If you haven’t watched that interview, go watch it after you finish this one here.
If your billable hours are consistently low, maybe it’s time to take the risk of having a courageous conversation with your attorneys and ask them for their honest feedback on why they don’t give you that many billable projects.
Ask if it’s something in your work product that could use some improvement. Tell them that you understand the importance of meeting your billable hour numbers and you want to do whatever you can to do that.
As I bring this to a close today, I want to add one final thought. Look, I was a paralegal for many years, and I feel for you. I never had a job description that said part of my responsibilities as a paralegal in that firm was to bill X number of hours per year.
Everything else was in there: help prepare for depositions, go to trial, draft pleadings, organize document productions.
What did it say about billable hours? Nothing. In that regard, I do believe that firms could do a better job making it clear from the start that this is part of your job responsibilities just like all of the other work that you do. Until I can get them all on board to do that, I’ll be here giving you as much advice as I can to help take the sting out of billable hours and to help you fast-track your paralegal career.
Along those lines, as I’m finishing up article, I have that feeling I had when I was finishing up the article on things I learned as a manager that I wished I knew as a paralegal – it’s that feeling of yeah, I need to let them in on all of these behind the scenes things that I wouldn’t have known about but for my stint as a paralegal manager. Things that none of the other paralegal blogs are going to be talking about.
Let me know what you think about that, and this article! And if you’re ready to blow your billable hour target out of the water this year join me in the Billable Hour Boot Camp.
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.
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