LexisNexis® Law Firm
Billable Hours Survey Report
Executive Summary
Despite the critical impact on a firm’s bottom line, it remains challenging for some
attorneys and legal staff to efficiently capture and bill their time, just how much was
a question to answer. LexisNexis® conducted a survey in late May with the objective
to gain insight of the gap between hours worked and billed by attorneys and legal
professionals.
Does the ability to bill more of the time worked vary by state and size of firm? With
about 500 survey respondents, we analyzed and identified a number of key findings.
Key Findings
1. There was a 54% difference between the highest and lowest reported hours billed
compared to hours worked by state, with Delaware reporting 94% and Oregon at
40% of time billed that was worked.
2. 39% of time worked is not being billed in the solo and two-attorney firm segment.
3. 92% of time worked is being billed in the 11-20 attorney segment. This segment
worked .1 hours more than the 20+ attorney segment and billed on average 1.8
hours more per day or 19%.
4. The size of law firm was not the silver bullet for effectively billing time that
is worked. The top 25% of respondents who reported billing their time most
efficiently was distributed fairly evenly by size of firm, except for the 20+ attorney
firms which had a much smaller representation.
5. The average number of hours worked in a day were 8.9 and average hours
billed = 6.9.
6. Looking at the survey results by size of law firm excluding the least and most
effective billing segment, the remaining law firm segments averaged between
24-26% gaps of hours worked and hours billed.
For the full topline report visit http://mattersofpractice.com/billable-hours-survey/
About the Survey
The LexisNexis® Law Firm Billable Hours Survey was conducted by the LexisNexis
Law Firm Practice Management business between May 15 and 25, 2012, among
legal professional in the United States who track their billable hours. The intent
of the survey was to learn more about the average number of hours worked and
billed by legal professionals. More than 8,000 legal professionals were invited
to participate either via email or via LinkedIn®. We received 499 respondents to
the survey, which consisted of four questions to identify who they are, the size
of their firm, average hours worked per day, and average hours billed per day. We
excluded 39 respondents from some of the data, as they are categorized as small
legal department or firms that bill only by Alternative Fee Arrangements (AFA). The
following pages provide detailed findings.
Page 2
Number of Respondents by Size of Law Firm
Respondents were asked to identify the size of their firm so that their
responses could be segmented. Firms of varying size are represented fairly
evenly, with the 3-5 attorney firms representing the largest segment (27%).
Figure 1
Legal Dept.
AFA Firms
39
20+ ATTY
1 ATTY
71
37
2 ATTY
53
11-20 ATTY
85
3-5 ATTY
131
6-10 ATTY
83
Figure 2
Firm Size
1
2
3 - 5
6 - 10
11 - 20
20+
Legal Dept. or AFA Firm
Responses
% by Firm Size
7115.83%
53
12.83%
131
27.66%
83
18.04%
85
17.64%
37
8.02%
39
7.82%
Total Responses: 499
Page 3
Respondents by Geographical Location
All states except Maine were represented in the survey, 14 states had more than
10 survey participants with California leading with 67 respondents. Ninety-five
respondents or 19% of respondents did not provide state data.
Figure 3
70
67
60
50
40
30
20
10
0
11
11
11
12
12
13
NV
OH
WA
NC
GA
MA
13
14
TN
MI
18
19
CO
PA
States with more than 10 respondents
Page 4
22
23
23
NY
IL
TX
CA
States Most Effective at Billing Their Time Worked
Location seems to have an impact on how effective attorneys are at billing
their time, as shown in Figure 4. In analyzing data by billing efficiency by
state, Delaware reported the highest billing efficiency at just over 94%, while
Oregon reported the least efficient billing at 41%. The least efficient 25% of the
respondents are prevalent in the mid-eastern states (dark blue).
Figure 4
Figure 5
States Ranked by % of Hours Billed versus Hours Worked
Legend
Billed > 40% but < 63%
Billed > 63% but < 70%
Billed > 70% but < 76%
Billed > 76% but < 100%
OR
40.63%
VT 63.16%
AL
KY
VA
SD
OK
MA
MO
IN
MN
TN
OH
SC
49.55%
5 1 .14%
5 1 .55%
55.26%
56.18%
57.15%
59.26%
59.30%
59.39%
60.66%
60.96%
63.06%
IA
WI
GA
AK
KS
FL
MD
ND
NE
MI
NV
WA
NC 70.05%
AR
76.19%
63.70% PA 70.27%
63.72% TX 70.48%
63.93% CA 71.02%
64.71% CT 71.88%
65.35% DC 72.97%
66.31% AZ 73.81%
66.36% NM 74.18%
66.67% NH 74.29%
66.67% HI 75.00%
67.12%
WV 75.00%
68.90% ID 75.83%
69.44%
MT
CO
NJ
NY
UT
LA
WY
RI
IL
MS
DE
76.67%
77.07%
80.86%
80.92%
81.13%
82.76%
83.33%
83.78%
85.74%
88.55%
94.44%
Page 5
Gap of Time Worked vs. Billed by Segment
In segmenting the firms by size, solo and two-attorney firms were the least
efficient segments, billing just 60% of their time. As firms grow, billing efficiency
rises, with the 11-20 attorney firms having the best efficiency at 92%.
Figure 6
100
92%
80
Percentage
76%
78%
74%
73%
60
60%
60%
1
2
40
20
0
3-5
6-10
11-20
Number of Attorneys
% Hours Worked - Billed
Page 6
% Hours Worked - Not Billed
20+
Total
Conclusion
The billable hour is still the critical lever for how many firms can affect
profitability. Just a few more minutes per day per attorney can increase revenue
by tens of thousands of dollars. But a gap, can lead to lost revenue and lower
profitability.
The LexisNexis Billable Hour Survey only exposes the tip of the iceberg and the
plan to drilldown further with other surveys is around the corner. Our hypothesis
is there are other reasons that contribute to this gap.
Not utilizing and/or leveraging staff for non-billable functions
Inefficient timekeeping, managing and billing client work
Goodwill issues, i.e.:
• Lawyers spend some of their time engaged in networking, business
development and other non-billable activities -- particularly when
business is slow.
• Some lawyers believe they cannot bill all clients for all hours worked so
they purposely “discount” the actual number of hours worked in order to
keep clients happy.
At the end of the day, few attorneys can bill for every minute worked. However,
by looking closely at how time is spent working, attorneys can begin to bridge
the gap of hours works versus hours billed.
Page 7
About LexisNexis
LexisNexis Legal & Professional (www.lexisnexis.com) is a leading global
provider of content and technology solutions that enable professionals in
legal, corporate, tax, government, academic and non-profit organizations to
make informed decisions and achieve better business outcomes. As a digital
pioneer, the company was first to bring legal and business information online
with it Lexis® and Nexis® services. Today, LexisNexis harnesses leading-edge
technology and world-class content, to help professionals work in faster, easier
and more effective ways. Through close collaboration with it customers, the
company ensures organizations can leverage its solutions to reduce risk,
improve productivity, increase profitability and grow their business. Part of Reed
Elsevier, LexisNexis Legal & Professional serves customers in more than 100
countries with 10,000 employees worldwide.
LexisNexis helps professionals at law firms and legal departments of all sizes
manage the business element of their practice with innovative software
and mobile solutions for customer relationship management, competitive
intelligence gathering and assessment, time and billing management, matter
management, client analysis, legal holds and more.
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