Partner hours are a critical metric for law firms. They refer to the billable hours recorded by equity and non-equity partners, which generate revenue for the firm. Tracking and managing partner hours is essential for law firms to maximize profitability, ensure partners are working at full capacity, and benchmark performance.
Partners are the most senior and experienced lawyers at a firm. Their time spent working directly translates into billable hours that can be charged to clients. As owners of law firms, partners have a responsibility to drive business and generate income. The number of billable hours measures how partners are spending their time and how much they are contributing to the firm’s bottom line.
Partners aim to meet annual billable hour targets, which are typically around 2,000 hours per year or more. Their ability to hit these targets impacts their compensation and the firm’s financial health. Firms analyze partner hours to identify high and low performers, adjust workloads, and uncover problems that may be affecting productivity. Careful monitoring of partner hours also allows firms to demonstrate high value to clients.
With rising pressure on law firm profit margins, there is a renewed emphasis on optimizing partner hours. Firms are getting more aggressive about increasing billable targets and ensuring partners bill as much time as possible. This makes partner hours an essential data point for law firms to track and manage in order to strengthen their financial performance.
Setting Partner Hours Expectations
Law firm partners are expected to bill a certain number of hours each year, but the exact expectation varies based on several factors. Here are some guidelines on typical partner billing hour expectations:
Equity Partners: Equity partners are generally expected to bill the highest number of hours, averaging between 1,800 – 2,200 billable hours per year. Some firms may expect even more. As owners of the firm, equity partners are focused on business development and matters that generate significant revenue.
Income Partners: Income partners usually bill slightly fewer hours than equity partners, averaging 1,500 – 1,800 per year. Income partners have ownership stakes in the firm, but lower than equity partners. Their practices focus more on servicing existing clients than developing new business.
Salaried Partners: Salaried or non-equity partners bill the fewest hours, averaging 1,200 – 1,500 hours annually. They are paid a fixed salary and have no ownership stake in the firm. Their role focuses on legal expertise and managing client relationships.
Seniority: More senior partners are expected to bill fewer hours than junior partners, as they take on more management responsibilities. Junior partners tend to bill closer to associate hours.
Practice Area: Partners in lucrative practice areas like corporate law or litigation may have higher billing expectations than those in other groups.
Firm Size: Partners at large, prestigious firms often have higher billing quotas than those at small or midsize firms.
Economic Conditions: In weaker economies, firms may reduce partner hour expectations to account for decreased client demand. Expectations increase in strong economies.
Setting clear, reasonable partner billing expectations is crucial for law firm profitability and partner motivation. The standards depend largely on the partner’s role, experience, practice area, and overall firm dynamics.
Tracking Partner Hours
Law firms track my partner hours in order to understand attorney productivity and profitability. There are several methods firms can use to track partner time:
Timesheets – Requiring attorneys to manually fill out timesheets detailing their billable and non-billable hours is a common approach. Timesheets allow firms to capture detailed time data but rely on partner diligence.
Time tracking software – Legal timekeeping software provides an automated way to track hours. Programs like Time Matters, Clio, and Tabs3 integrate with billing and capture real-time time entry. This eliminates reliance on manual timesheet reporting.
Clock-in apps – Simple time tracking apps like Toggl allow attorneys to clock-in and clock-out for client matters on their mobile devices. This makes time entry fast and easy.
Productivity tracking – Software tools like Control or Spyder can passively track productivity by monitoring billable activities on attorney computers and devices. This automates time capture.
Client bills – Partnership agreements often stipulate that attorney time is calculated as a percentage of client bills. So client invoices can serve as a record of partner hours.
Honor system – Some firms use an honor system, trusting attorneys to honestly report hours worked without tracking or verification. This is reliant on partner integrity.
Firms weigh factors like accuracy, compliance, and ease-of-use when selecting timekeeping approaches. But tracking partner time is key for understanding the inner workings of a firm’s productivity.
Billable vs Non-Billable Hours
Law firm partners are expected to log a certain number of billable hours each year. However, not all partner hours are considered billable. It’s important to understand the difference between billable and non-billable hours.
Billable hours refer to time partners spend working directly for clients. This includes activities like:
- Legal research
- Drafting documents
- Client meetings
- Court appearances
- Client phone calls and emails
Essentially, any task that can be billed to a client is considered a billable hour.
Non-billable hours encompass the remaining time partners spend on the job. This includes:
- Firm management
- Recruiting
- Training and mentoring
- Business development
- Administrative tasks
- Continuing education
While these activities are still part of a partner’s job, they do not directly generate revenue. As a result, non-billable hours are tracked separately from billable hours.
The goal for law firm partners is to maximize their billable hours while still dedicating sufficient time to non-billable activities that are important for firm operations and growth. Striking the right balance is key for both individual partners and the overall success of the firm. Tracking both billable and non-billable time provides visibility into how partner hours are being spent.
Benchmarking Partner Hours
Understanding the average number of billable hours for partners across different types of law firms and practice areas can provide useful context when evaluating partner productivity. Some key benchmarks to consider:
Firm size – Partners at larger law firms (over 100 attorneys) average higher billable hours than those at smaller firms. Large firm partners often bill 1,800 – 2,000 hours annually, while small firm partners range from 1,200 – 1,500 hours on average.
Practice area – Partners in litigation and corporate transactional practices tend to have higher billing hours than those focused on less time-intensive areas like estate planning or intellectual property. Litigation partners frequently bill over 2,000 hours with 2,200 being common in large firms.
Individual productivity – The range around these averages is quite wide. The most productive partners bill 2,400 hours or more annually while others struggle to reach 1,500. Outlier partners may bill over 3,000 hours in extreme cases.
Equity vs non-equity – Equity partners, who share in a firm’s profits, generally have higher billing requirements in the range of 1,900 – 2,200 hours. Non-equity partners usually have lower targets around 1,600 – 1,800 hours.
Pro bono and training – Many firms allow partners to count some non-billable activities like pro bono work and training associates towards their hours goals. This effectively reduces the number of client billable hours required.
Understanding these benchmarks provides helpful context both for setting partner hour expectations and evaluating individual partner productivity. However, goals still need to be tailored to each firm’s economics and partner track.
Factors Impacting Partner Hours
A law firm partner’s billable hours are influenced by various factors beyond just client work. While billable client work is the primary activity partners aim to maximize, they also have other firm obligations that make demands on their time. Here are some key factors that impact partner billable hours:
Business Development
Partners are expected to contribute to business development efforts to bring in new clients. This includes networking, attending conferences, holding seminars, speaking engagements, writing articles, and other marketing activities. The time spent on these non-billable activities can be substantial for partners focused on business generation.
Firm Management
Depending on the firm structure, partners may be involved in various management and leadership roles. Serving on committees, recruiting, mentoring associates, and other administrative tasks related to managing firm operations all cut into billable time. The larger the firm, the greater these management demands may be on partners.
Client Relationship Management
Partners often play a key role in maintaining strong client relationships through regular communications and face-time with key contacts. While portions of this time might be billable, partners frequently engage in non-billable relationship-building activities.
Training and Development
Continuing education in the partner’s practice areas, developing new practice specialties, and general professional development require investments of time. Attending conferences, internal training programs, and staying current on industry trends impact billable hours.
Pro Bono and Community Work
Many firms expect partners to be involved in pro bono legal work in service of the community and legal profession. While contributing positively to society, pro bono activities reduce the time available for billable client work.
The balance between maximizing billable hours and fulfilling other partner responsibilities is a key challenge. The time demands on partners extend far beyond direct revenue-generating work, making it difficult to maintain high billable levels. Understanding these constraints can provide important context around partner billable hour performance and targets.
Maximizing Partner Billable Hours
Partners aim to maximize their billable hours to increase revenue and profitability for their firm. However, this can be challenging with the demands on partner time. Here are some tips for partners to maximize their billable hours:
Block off time in your calendar for billable work – Setting aside dedicated time for billable activities like client meetings, drafting contracts, and reviewing documents helps protect that time from getting consumed by other tasks. Block off multiple hours or half days each week.
Delegate non-billable tasks – Partners get drawn into many administrative duties like recruiting, training, and firm management. Identify tasks that can be delegated to associates, paralegals, administrators or automated to free up partner time.
Limit low-value activities – Assess how your time is spent each day and week. Minimize or eliminate low-value activities like excessive internal meetings, unnecessary emails and unproductive calls.
Track your time rigorously – Use a time tracking system religiously to record all billable and non-billable time. Review reports to analyze and improve.
Set billable hour targets – Establish a clear billable hour goal for yourself each month and year. Track progress and make adjustments to work patterns as needed to hit your target.
Reduce administrative burdens for associates – Make sure associates have resources and support so they don’t excessively rely on partner time for non-billable matters.
Use travel time productively – Bring work on trips and spend flight and waiting time on billable activities like calls, emails and drafting documents.
Take on new business development – Marketing, networking and client pitches are billable activities. Seek out opportunities to bring on new clients.
Avoid over-servicing clients – Be efficient with client needs. Don’t spend time on matters beyond what is required.
Evaluate alternative fee arrangements – Consider flat fees or value-based billing to incentivize efficiency on client work.
Challenges with Partner Hours
Law firms face several challenges when it comes to managing and tracking partner hours. Some of the key issues include:
Underreporting Hours
Many law firm partners significantly underreport their true billable hours. Reasons for underreporting include:
- Wanting to appear more efficient than they really are
- Avoiding scrutiny for not meeting billable hour targets
- Lack of discipline in timekeeping practices
- Forgetting to record all hours worked
Underreporting makes it difficult for firms to accurately benchmark partner productivity and profitability. It can also lead to partner compensation issues if hours billed don’t align with performance.
Overworking
In competitive law firms with high billable hour expectations, some partners overwork themselves to try hitting targets. This can lead to burnout, poor work-life balance, and health issues.
Firms face challenges managing overworking partners who take on too much client work. It can impact quality of service and lead to mistakes from fatigue.
Inaccurate Estimates
Partners may provide inaccurate estimates for client matters, leading to write-downs when the actual hours are higher. Reasons include underestimating complexity, scope creep, or inefficient working.
Inaccurate estimates reduce partner billing realization rates. Firms need better insights into factors causing estimate issues to improve accuracy.
Lack of Visibility
With decentralized partner timekeeping across matters, firms often lack visibility into true capacity and demand. This makes it difficult to align partner resources efficiently.
Better tracking and analysis of partner hours can help identify resourcing gaps and opportunities. But many firms still rely on manual partner reporting processes.
Partner Hour Trends
The legal industry has seen significant changes in partner hours and utilization rates over the past couple of decades. Some key trends include:
Declining billable hours – Whereas partners used to regularly bill over 2000 hours per year in the 1980s and 1990s, average partner hours have declined to around 1600-1800 per year at many firms. Economic downturns, increased competition, and client demands for efficiency have driven this decrease.
Increased variability – Partner billable hours can vary widely, from under 1000 to over 2500 per year. There is greater divergence as rainmaking partners focus more on business development.
Lower target hours – Many firms have reduced annual billable targets for partners to around 1600 hours, compared to 1900-2000+ hours previously. This accounts for more non-billable work.
Higher utilization expectations – Despite lower billable targets, there is pressure on partners to have a higher realization rate and hit a higher percentage of their billable goals. Utilization rates of at least 50% are common expectations now.
Growth of alternative fee arrangements – As hourly billing has fallen out of favor, alternative arrangements like flat fees and value-based pricing have grown. This puts less emphasis on billable hours metrics.
Technology enabling efficiency – Partners are able to be more efficient with technology assistng research, communication, and document preparation. This likely facilitates the decline in billable hours.
Increased client demands – Clients want faster turnaround, lower bills, and alternative fee arrangements, which impacts partner time spent. Partners must do more client service in less time.
Going forward, the trends of lower billable targets, increased variability between partners, and pressure for higher utilization will likely continue. Technology will also drive further efficiency. However, demand for senior expertise keeps partner hours high at many firms.
Conclusion
Partner hours are one of the most important metrics for law firms. They directly impact profitability and compensation. With the right systems and culture in place, firms can optimize partner hours.
To recap, firms should start by clearly setting expectations for billable hours. This provides transparency and accountability around targets. Tracking hours consistently through timekeeping is critical. Reporting tools give insights into productivity. Firms can then benchmark hours versus peers to identify gaps.
Many factors influence partner hours like practice mix, client demands, and associate leverage. Firms must support partners in maximizing billable time. Providing tools to enhance efficiency and reduce administrative tasks is key. Coaching partners on business development, delegation, and time management also helps drive hours.
Despite best efforts, challenges persist. Partners juggle competing priorities between billable work, clients, marketing, management, and more. Striking the right balance is an ongoing struggle. External trends around client demands, pricing pressure, and technology disruption further complicate hitting targets.
With a data-driven approach, supportive culture, and focus on efficiency, firms can optimize partner hours. But it requires continued commitment to help partners succeed. Tracking and managing partner time remains an essential element in law firm management.