Billable hours. Non-billable hours. Most people outside the legal world don’t know the difference between the two, but for those who work in law firms, the distinction is critical.
Many law firms have minimum billable hour requirements, somewhere between 1,800 and 2,200 hours per year for first-year associates, according to the National Law Review. But how many actual working hours does it take to amass this amount of billable hours?
The burden of billable hours
According to the Yale Law School Career Development Office, in order to reach 1,800 annual billable hours, an associate would need to work their regular hours each week plus an extra 20 minutes Monday through Friday (for a total of 2,430 hours per year) to generate 1,832 billable hours.
If they were to work one Saturday each month from 10:00 a.m. until 5:00 p.m., they would end up with around 1,834 billable hours – even though they would have actually worked 2,434 hours.
This makes the substantive legal work performed by non-attorneys even more critical.
The ABA Model Guidelines for the Utilization of Paralegal Services states that a lawyer may include a charge for the substantive legal work performed by a paralegal. Some law firms establish how many billable hours paralegals are expected to produce, which might fall somewhere between 800 and 2,000 hours per year.
Allowing for vacations and holidays, this breaks down to a minimum of 37 billable hours per week. Thus, assuming that a paralegal works a standard 40-hour week, this leaves only three hours per week for non-billable activities.
What paralegal work is billable?
According to a landmark U.S. Supreme Court ruling, “purely clerical or secretarial tasks should not be billed to the client at a paralegal rate, no matter who performs them.” For the most part, courts around the country have ruled that clerical tasks like typing, organizing files, searching PACER and eFiling documents are not billable but should instead be considered part of the firm’s overhead.
Generally, for a paralegal’s work to be billable, it must:
- Be legal in nature
- Be completed by a professional who possesses the proper education, training, or work experience
- Due to its complexity, would otherwise have required the services of an attorney.
However, many law firms and attorneys struggle when defining the exact tasks that can be billed to the client when they are completed by a paralegal.
According to the National Federation of Paralegal Association, a paralegal may “perform substantive legal work that requires knowledge of legal concepts and is customarily, but not exclusively, performed by a lawyer.”
Billable paralegal work commonly includes:
- Legal research and writing
- Factual investigation
- Legal document preparation
- Corresponding with and obtaining information from clients
- Attending court proceedings
While non-billable clerical tasks like making copies, filing, fulfilling service requirements, issuing subpoenas, and filling out court forms are routinely performed by paralegals, their time can usually be better spent in the performance of substantive (billable) legal work.
When the majority of a paralegal’s work is billable, this will subsequently lighten the attorney’s workload, keep the clerical staff busy, and provide tangible cost savings for the client because paralegals bill at a lower rate than that of attorneys.
Billable hours and the state of the legal market
Since the recession a decade ago, clients are putting greater pressure on law firms to reduce costs and alter their billing practices. More and more legal consumers are requesting flat fee arrangements rather than agreeing to be billed by the hour, and as a result, according to the 2018 Report on the State of the Legal Market, attorneys are now billing fewer hours than they did ten years ago.
But non-billable time ultimately cuts into the firm’s bottom line, and the financial health of many law firms still depends not only on how many hours the attorneys are billing, but also how many billable hours that the firm’s paralegals are generating.
Therefore, it stands to reason that the more billable hours a paralegal produces, the better their chances to score a higher salary. Or at least make a stronger case for a pay raise.
Do you have something to add regarding billable hours for paralegals? Tell us about it in the comments!