Tracking billable hours accurately and efficiently is one of the most critical functions of a law firm. Yet this activity in itself is often an expensive headache, eating up working hours with non-billable and burdensome administrative tasks. With increasing demands on attorneys’ time, the need for an effective solution with automated workflows to manage and record billable activities is apparent.
So, how do you find that better solution? Googling “how to track billable hours” online leads you down rabbit holes of legal billing software options. What you truly need is something that does it all — legal billing software that’s part of a broader practice management solution.
But we’re getting ahead of ourselves. In this short guide, we’ll dive deeper into how lawyers track and calculate billable hours. We’ll explore the features and benefits of time and billing software for law firms, how this software can help your firm achieve better financial outcomes, and tips for selecting the right technology for your firm’s needs.
How Do You Calculate Legal Billable Hours?
To calculate legal billable hours accurately, most attorneys and legal professionals time their work, then break that time into six-minute (1/10th of an hour) increments with the help of a billable hours chart, like this one:
So, if you worked on a task for a client for 23 minutes at a rate of $150 per hour, your billable hours calculation would be: 0.3 x $150 = $45. If you worked for two hours and 12 minutes at the same rate, your calculation would be: 2.2 x $150 = $330.
Manually timing and calculating your billable hours can quickly become its own time-consuming, non-billable task. The best way to track hours worked is to use modern legal practice software like PracticePanther.
The days of scribbling your start and stop time on a legal pad or sticky note are over. With PracticePanther, you can easily run multiple timers, stopping and starting as you multitask, and capturing the exact times you worked.
Worried about missing billable hours? You can create time entries from calendar events, tasks, emails, notes, text messages, or phone calls. Playing catch-up? It’s simple to add or edit time entries in bulk. And, best of all, you’ll be able to generate robust custom reports of all your firm’s billable and non-billable time so you can understand your financial data on a granular level.
How Are Billable Hours Tracked Using Software?
Tracking billable hours with software should be a simple and intuitive workflow involving timers. With PracticePanther, it’s easy: set an hourly rate for yourself and/or other users, then click “+New” towards the top of the page and select “Time Entry.” Then, choose the Contact and Matter you’re working on, and click “Start Timer” to begin tracking. Or, if needed, you can manually enter your time after the fact if that’s the workflow you’re more comfortable with.
The functionality doesn’t end there. You can also:
- Select different users at different rates.
- Add notes for each time entry to keep track of what you were working on.
- Seamlessly transition your time tracking from your computer to your mobile device.
- Generate invoices with your firm’s logo to increase brand awareness.
- Compare time entries across users and matters.
Keep in mind that not all legal software is created equal. The best billable hours tracker should include:
- Robust, customizable, and user-friendly functionality.
- The ability to manage all aspects of the legal billing cycle in one place.
- Full compliance with IOLTA, ABA, and state bar guidelines for legal payments.
By capturing every last minute of billable hours using advanced software features, you’ll find yourself significantly closer to meeting your billable hours requirements, some of which can be quite high.
How Many Billable Hours Do Most Law Firms Require?
According to the most recent research available from the National Association for Law Placement, overall averages for billable hours per year are around 1,800. Other sources report that most law firms have a yearly quota for billable hours set between 1,700 and 2,300.
The number of billable hours that law firms require varies significantly due to factors such as firm size, location, and the specific demands of the practice area. For example, a small law firm’s billable hours could be lower than a large firm’s because there are fewer people to handle the administrative burden of running a small practice.
It’s also important to note two things about a billable hours quota:
1. “Billable” and “working” hours are not the same.
Yale Law School’s example is particularly illuminating: Imagine your work day is from 8:00 am to 6:00 pm, giving you 10.0 hours of “working” time. Although you’re at work for 10 hours, during that time, you also:
- Take an hour for lunch
- Need two 15-minute bathroom/coffee breaks
- Spend half an hour reading legal updates and reviewing general correspondence
- Attend department meetings, occasional conferences, and CLE, totaling a half hour.
So, although you’ve “worked” for 10 hours, you may only bill 7.5 hours due to the time spent on other non-billable activities.
2. There may be unspoken expectations to exceed this quota.
This is a major issue — in fact, the New York City Bar Association found that while nearly all the surveyed law firms had a minimum billable hour requirement, there was insufficient communication of the importance (or lack of importance) of meeting or exceeding this number as a measurement of success.
What does this mean for law firms? Without clear communication, the pressure to bill can lead to overwork, negatively impacting an attorney’s quality of life. When accepting an offer, it’s important to evaluate the communication practices of the firm you’ll be working at. If you find yourself unsure, it’s always appropriate to advocate for yourself and ask for clear communication from your superiors.
What Is the Best Way to Track Billable Hours?
The best way to track billable hours efficiently and effectively is to use a solution like PracticePanther. We make legal billing simple through automated workflows and intuitive, user-friendly interfaces. But billing is just the beginning — what if you could optimize every administrative function of your law firm?
With PracticePanther, you can. Our comprehensive law practice management software offers a wide range of features to help your legal team focus on what matters most: your clients. Our functionality includes:
- A robust legal billing system that covers time and expense tracking, invoice templates, and so much more. Plus, PracticePanther strictly follows IOLTA, ABA, and state bar guidelines.
- Secure, cloud-based case management so you can work from anywhere at any time.
- Digital legal files software features that eliminate those piles of paper on your desk, keeping you organized with document templates and easy, digital access options.
- Law firm calendar software features that help you manage all of your calendars in one location with alerts and reminders to ensure you never miss a meeting or deadline.
- 100% compliant ePayment service and eSignature capture features, making it easy for clients to make payments and sign documents online.
- High levels of security with 256-bit encryption and HIPAA-compliant data storage. Plus, you can easily limit data access by location and assign the right access levels to each user, mitigating your risk of data breaches and other cyber threats.
- Legal software integrations so you can sync platforms like your Outlook or Gmail inboxes, Exchange calendars, or even your Box, Dropbox, and Google Drive accounts.
You didn’t go to law school to waste time on administrative tasks. With PracticePanther, you won’t have to. Our powerful suite of functionality is designed to automate and simplify all the complexities of legal practice management in one user-friendly interface. Approved by numerous bar associations and backed by strong customer ratings, PracticePanther is where efficiency meets excellence. We’re here to be your partner in enhancing the productivity and profitability of your legal practice.
Ready to see PracticePanther in action? Book a demo with our team today to experience firsthand how PracticePanther can transform your day-to-day operations. Don’t want to wait? Sign up for a free trial and get started now.
