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haroldgunderson

Billable Hour Targets

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I'm currently a 2nd year associate at a national firm with a 1700 billable hour target. This year has been up and down and I'm anticipating that I'm going to fall short of the target (probably get around 1600 to 1650 billables for the year). Can any lawyers on here shed some light on what happens if you don't reach the billable target? Fired? Warning? No bonus? Nothing? Thanks!

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I'm currently a 2nd year associate at a national firm with a 1700 billable hour target. This year has been up and down and I'm anticipating that I'm going to fall short of the target (probably get around 1600 to 1650 billables for the year). Can any lawyers on here shed some light on what happens if you don't reach the billable target? Fired? Warning? No bonus? Nothing? Thanks!

 

At my old firm, not meeting target meant no bonus (obvs.) but didn't mean auto-firing.  The first time, especially if you were pretty junior, there is a comment like "I'm sure you'll pick up next year".   Then, its get a bit more pointed, but if the work you do is quality, they won't hammer it.  After three to four straight years you'll start getting suggestions about whether there may be somewhere else you'd like to be. 

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I'm currently a 2nd year associate at a national firm with a 1700 billable hour target. This year has been up and down and I'm anticipating that I'm going to fall short of the target (probably get around 1600 to 1650 billables for the year). Can any lawyers on here shed some light on what happens if you don't reach the billable target? Fired? Warning? No bonus? Nothing? Thanks!

What practice area?  The significance of the "target" will vary depending on your practice area (As an associate I was never even close to my billable target, had I been a corporate lawyer they would have fired me.  As a tax lawyer, there's more forbearance).  Is the rest of the firm busy, or does everyone have capacity? (Obviously, if it's just you, that's going to raise questions)  What else have you been doing?  If you've been doing productive non-billable work that's important (less likely as a 2nd year associate, but it happens - maybe you worked on updating the firm's precedents or preparing for a major pitch). Have you been adding value to the firm?  What's your total docketed time (including non-billable)?

 

They're probably not going to fire you (may depend on the firm though - are you a would-be Partnor at Davies? - and how other people are doing), it will affect your bonus (though, again, that will depend on other factors - if you've been doing valuable work, they may still want to reward you).  Sometimes people just have slow years (and a 1650 year isn't THAT slow), it happens.     

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If you're at 1650 and target is 1700, I'm not sure they will even see it as an issue for a 2nd year associate (you missed target by 3%).  Consistently not hitting target is obviously an issue, but I expect it will only be briefly be mentioned in your review, or might even mentioned as a positive "Hey, you're a junior, and you're very close to target, good work, but try to add at least another 50 hours next year." [At least that is how my old firm would have very likely handled it, but our target was 1800 and they expected a very high effective rate.]

 

However, as MaxBob points out, firm's reaction will vary widely depending on firm culture and practice area.

Edited by conge

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Can also depend on the location and firm policy. Some nationals will blanket all of their branches with the same targets but don't really expect some of the smaller shops to hit it (it's not tied to bonus). But considering you're a second year call, you would have found out whether or not this is the case for your firm during article/first year. 

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My sense (I only was in private practice for a very few years so my expertise is limited) is that the reviewing partners are primarily concerned with a pattern of low hours, and in the first 2-3 years development as a lawyer is more important than hitting target. That being said, if everyone in your group is well above target it might be more important.

 

I don't know your practice area, but I wonder how well you can anticipate how you will do for the year as of September. Plenty of time for things to blow up and increase your hours. I think it is most important to ensure you have good relationships with partners and senior associates, so you have a flow of work from within the firm, since your client base is going to start from internal referrals.

 

I am so glad I no longer have to docket...god I hated calculating my numbers and wondering if I was on track.

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What if associate A is more efficient than associate B, but B makes target while A doesn't? Is there accounting for situations like that generally at law firms?

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What if associate A is more efficient than associate B, but B makes target while A doesn't? Is there accounting for situations like that generally at law firms?

 

That doesn't make any sense. It's not the hours you're at work that are being discussed here. It is the hours that are billed, as in to a client. 

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That doesn't make any sense. It's not the hours you're at work that are being discussed here. It is the hours that are billed, as in to a client.

 

I could see it happening where one associate ends up having a different (is it senior associate or partner?) who's in charge of determining how many hours out of all the hours worked on a file, actually get billed. In my firm we had teams and the partners of each team were known for having their own billing practices. It was a big topic of discussion as to whether this issue would potentially affect bonuses. Some people were clearly more efficient and some would spend much longer/"look better" and the efficient archs worried that they still looked "worse" when it came to billables. One overall managing partner was in charge of bonuses.

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I suppose this could happen at a firm. It seems like a sure fire way to get good performing associates to jump ship. To be fair compensation is opaque so maybe the associate would not know. After a couple years though I assume no one makes lockstep. Certainly where I worked had abandoned lockstep for associates above the first couple years.

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That doesn't make any sense. It's not the hours you're at work that are being discussed here. It is the hours that are billed, as in to a client. 

 

No, this isn't exactly how it works.

 

Note that I agree with those who raised the issue about the variability of partner billing practices. 

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What if associate A is more efficient than associate B, but B makes target while A doesn't? Is there accounting for situations like that generally at law firms?

 

Effective rates can matter at some firms. For example, hours actually billed to a client won't make up your target, but rather hours you docketed (i.e. submitted to the billing lawyer, via an electronic system) that made up your target.

 

If it takes you 2500 hours to docket 1700, and it take your friend 3000 hours to docket 1700, you're on equal footing in terms of hitting target.

 

The effective rate takes into account how many of your docketed hours actually got billed to client. So if 90% of your 1700 got billed to client, and 70% of your friend's 1700 got billed to the client, you'd have a better effective rate. A firm might say: you need a target of 1700 docketed with a 98% effective rate. Target matters most under this model, at least for junior lawyers, but effective rate can also be closely tracked.

 

After you meet target, you can get bonus based on a certain percentage of everything actually billed to client - so the higher your effective rate, all other things being equal, the higher your bonus. That's the incentive for a high effective rate.

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What practice area?  The significance of the "target" will vary depending on your practice area (As an associate I was never even close to my billable target, had I been a corporate lawyer they would have fired me.  As a tax lawyer, there's more forbearance).  Is the rest of the firm busy, or does everyone have capacity? (Obviously, if it's just you, that's going to raise questions)  What else have you been doing?  If you've been doing productive non-billable work that's important (less likely as a 2nd year associate, but it happens - maybe you worked on updating the firm's precedents or preparing for a major pitch). Have you been adding value to the firm?  What's your total docketed time (including non-billable)?

 

They're probably not going to fire you (may depend on the firm though - are you a would-be Partnor at Davies? - and how other people are doing), it will affect your bonus (though, again, that will depend on other factors - if you've been doing valuable work, they may still want to reward you).  Sometimes people just have slow years (and a 1650 year isn't THAT slow), it happens.     

 

[emphasis added]

 

While recognizing it seems common, this is something that's always bothered me on principle. If you're a junior associate and a partner (with authority to do so) directs you to work on non-billable work, that should count - you're an employee obeying orders to work on a matter. Similar to how if you're ordered to spend lots of time working on a matter and the partner writes down your time because they think it's good client relations or the answer you found in research was unhelpful or whatever (not because you spent too much time or had a poor work product), you're being punished for obeying reasonable employer requirements. Or if a partner has you work on e.g. a small claims court file that they know only a fraction of time spent will be billed, because it's a major client with some minor dispute with a disgruntled customer or whatever, it's unfair for the time spent to be written down for purposes of meeting targets.

 

It's different for partners (at least for equity partners) who have an agreement that e.g. contemplates everyone does their share of non-billable work, or if time spent attracting new business is recognized/acknowledged. And in theory if every associate was given the same amount of non-billable work, it would be fair, but I doubt it ends up being all that even in practice.

 

If you work in an auto repair shop and the owner tells you that this week because of how busy the shop is they think it will help everyone's efficiency if instead of working on cars you help keep tools organized, the shop clean, meet with customers to discuss possible customization work of their vehicles, etc., and then at the end of the week gives everyone else but not you a bonus for how many hours of labour were billed, that would also be unfair...  :evil:

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The firm I worked at would penalize partners for writing off billed associate time (after the associate was senior enough). I agree with the comments about non-billable work. The underlying truth is that compensation is rarely fair--in almost all places there is always a certain amount of politicking in determining compensation, no matter how "objective the metrics" appear. But I think it is also true that any partnership that will last has to either treat its associates well (in terms of compensation reflecting the actual effort put in), or accept a high burn rate.

 

Also from the associate perspective I think any year's bonus should be less important than the prize--an equity stake (unless one's goal is to leave).

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[emphasis added]

 

While recognizing it seems common, this is something that's always bothered me on principle. If you're a junior associate and a partner (with authority to do so) directs you to work on non-billable work, that should count - you're an employee obeying orders to work on a matter. Similar to how if you're ordered to spend lots of time working on a matter and the partner writes down your time because they think it's good client relations or the answer you found in research was unhelpful or whatever (not because you spent too much time or had a poor work product), you're being punished for obeying reasonable employer requirements. Or if a partner has you work on e.g. a small claims court file that they know only a fraction of time spent will be billed, because it's a major client with some minor dispute with a disgruntled customer or whatever, it's unfair for the time spent to be written down for purposes of meeting targets.

 

It's different for partners (at least for equity partners) who have an agreement that e.g. contemplates everyone does their share of non-billable work, or if time spent attracting new business is recognized/acknowledged. And in theory if every associate was given the same amount of non-billable work, it would be fair, but I doubt it ends up being all that even in practice.

 

If you work in an auto repair shop and the owner tells you that this week because of how busy the shop is they think it will help everyone's efficiency if instead of working on cars you help keep tools organized, the shop clean, meet with customers to discuss possible customization work of their vehicles, etc., and then at the end of the week gives everyone else but not you a bonus for how many hours of labour were billed, that would also be unfair...  :evil:

 

I imagine it varies from firm to firm, but there is a distinction between hours billed and billable hours.  Our practice is to look at billable hours for target purposes.  Now, if a lot of time is being written off because you're inefficient, that's going to raise questions in the qualitative portion of your assessment, if your hours are written off because, hey, we want to give the client a discount or we had some sort of AFA, that's not the associate's problem. 

 

We also give some weight to non-billable time - indeed, one of my early reviews criticized me for not docketing enough non-billable time (I did it, just didn't docket it.  Needless to say that changed quickly). Obviously it depends on what you do, but we recognize that a lot of non-billable work is an investment that has long-term value to the firm.    I realize that different firms have different practices in that regard, but I think valuing that work is important.  

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I imagine it varies from firm to firm, but there is a distinction between hours billed and billable hours.  Our practice is to look at billable hours for target purposes.  Now, if a lot of time is being written off because you're inefficient, that's going to raise questions in the qualitative portion of your assessment, if your hours are written off because, hey, we want to give the client a discount or we had some sort of AFA, that's not the associate's problem. 

 

We also give some weight to non-billable time - indeed, one of my early reviews criticized me for not docketing enough non-billable time (I did it, just didn't docket it.  Needless to say that changed quickly). Obviously it depends on what you do, but we recognize that a lot of non-billable work is an investment that has long-term value to the firm.    I realize that different firms have different practices in that regard, but I think valuing that work is important.  

 

That's great that you and your firm, value it, but it's not how some/many do it (or are reported to do it). That is, what you say is not the associate's problem, is the associate's problem at firms other than yours.

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That's great that you and your firm, value it, but it's not how some/many do it (or are reported to do it). That is, what you say is not the associate's problem, is the associate's problem at firms other than yours.

I agree. There's a reason I don't like some firms on the street.  Firm culture matters.  Something for students doing OCIs to keep in mind.  

Edited by maximumbob

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I agree. There's a reason I don't like some firms on the street.  Firm culture matters.  Something for students doing OCIs to keep in mind.  

 

Something that they can't measure and will know little to nothing about until its far too late for them to undo their choices?

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Something that they can't measure and will know little to nothing about until its far too late for them to undo their choices?

Really - you didn't have a vibe about different firm cultures when you were doing the rounds?  I sure as hell did - I avoided one firm precisely because I didn't dig their culture, and everything I've seen about it since confirms that choice.  And if you talk to people you can get a sense of the different cultures.  Yes, most students are clueless about the differences between bay street firms, that doesn't mean they have to be.  

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Something that they can't measure and will know little to nothing about until its far too late for them to undo their choices?

Students are forbidden from asking current associates how billing / compensation works at their firm? I know I asked when I was interviewing for 1st year associate spots...

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