Best Practice: How many hours should associates be billing?

Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the managing partner of a 12-lawyer insurance defense firm in Oklahoma City. We have four partners and eight associates. While we have grown over the last five or six years by adding associates, our profitability has remained flat. We feel that we are not getting the billable hours that we should out of our associates. What are other firms like ours getting out of their associates in terms of billable hours?

A. Most of my insurance defense firm clients expect a minimum of 1,800+ annual billable hours from associates and partners. Often 1,800 is a requirement to remain employed and the minimum threshold to be eligible for a performance bonus. Often I see billable hours at 2,000 to 2,200 in insurance defense firms.

This goal is getting harder to achieve. Insurance companies are now managing hours as well as rates and outlining their expectations in their billing requirements and guidelines. Law firms can no longer "lean on the pencil" like they used to do in the old days. In addition, if business and file assignments are down you can't expect associates to work on work that isn't there.

If you are not getting 1,800 hours - the problem may not be associate work ethic - it may be that more time needs to be invested by the partners in focused business development and bringing in more work.

Click here for our financial management topic blog

Click here for articles on other topics

John W. Olmstead, MBA, Ph.D, CMC, (www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.