Billable Hours Tracker for Young Lawyers
Executive Summary
Billable hours are common practice among most law firms. Lawyers are accustomed to tracking their hours and achieving billable hour requirements. These requirements may determine promotions as well as bonuses. Many important decisions are made using your billable hours so lawyers should be actively tracking their hours. To help lawyers track their actual billable hours and project their future hours, here is a free Billable Hours Tracker. This tracking tool can be used by any lawyer to track their progress towards promotions and bonus goals. This monthly tracker can also help you understand what future bonuses to expect, if you need to increase your monthly billable hours, and how much time you can take off for vacation while still meeting your billable hour goals. There are also tips on how to effectively manage your billable hours over the year.
If you are a private practice lawyer, you likely have to bill hours to clients. Most firms have minimum billable hour requirements. These requirements can be simple or complex and include different types of hours such as pro bono hours, diversity & inclusion hours, and other categories.
Billable hours requirements are customary in private practice because that is how you generate revenue as a lawyer. Without setting billable hour goals, your firm would not earn enough money to operate and pay its lawyers.
To incentivize lawyers to exceed their minimum billable hours, firms may have supplemental goals like billable hour thresholds to be considered for promotion and earn bonuses. When promotions and bonuses are on the line, the need to plan your billable hours for the year becomes more important.
You do not want to be the lawyer that misses a bonus because they were 20 billable hours short. You also do not want to be the lawyer who avoided taking vacations to bill more hours than they had to.
When young lawyers understand their billable hours to date and the hours necessary to achieve obtainable goals, their work-life balance can improve. It can also lead to more financial confidence since you can see which billable hour goals are realistic for the rest of the year.
To help young lawyers track their billable hours, I have created this Billable Hour Tracking spreadsheet. You can download your copy right here for free. Share it with your peers too!
Click the image to create your copy of the Billable Hours Tracker
The Importance of Tracking Your Billable Hours
When promotions and bonuses are at stake, you cannot afford to ignore this metric. Billable hours are at the center of the operations of a law firm. They should also be at the center of your financial planning.
We all want to progress in our careers, demonstrate a strong work ethic, earn bonuses, and enjoy our personal lives. Tracking your billable hours allows you to do just that.
Tracking Hours Gives You Control Over Work-Life Balance
Tracking your billable hours allows you to better plan when to take vacations and estimate your future bonuses. If you are a lawyer with a certain billable hours goal to earn a bonus, knowing 4-6 months in advance if you are ahead of schedule or behind schedule to reach that goal can significantly impact future decisions.
Some lawyers may see the hours needed to earn a bonus compared to their previous monthly billable hours and determine that the bonus threshold would require too much additional work. Other lawyers may see the goal and start asking for more projects each month to meet their goal.
By tracking and projecting your billable hours, you can also plan for your bonuses. Example: A lawyer wants to buy a new car and plans to use their bonus this year to finance the purchase. They have two bonus thresholds that they can achieve. With 2,200 billable hours, the lawyer will receive $10,000. With 2,300 billable hours, the lawyer will receive a $25,000 bonus.
About five months into the year, the lawyer uses the Billable Hours Tracker to see how likely the bonuses are. They find out that currently, they are behind schedule to even reach the 2,300 billable hour bonus. This lawyer has a few decisions to make:
Save more from each paycheck to buy the car since the $10,000 bonus is not enough
Take on additional projects to boost hours
Plan to purchase a less expensive car and aim for the 2,200 billable hours goal
Understanding your billable hours for the year empowers you to manage your future work-life balance.
Billable Hours Strategies
When tracking your billable hours, you may decide between working more to achieve ambitious targets or taking some much-needed vacation to protect yourself from burnout.
Here are a few strategies to implement in your day-to-day billing to effectively achieve your billable hour goals.
6-minute rule
Would you be willing to work six more minutes to earn a much larger bonus?
Of course, you would.
Six minutes is not much of your time, but over a year, 6 minutes a day can add a significant amount of billable hours to your total. On average, there are roughly 250 work days a year. For some BigLaw lawyers, you likely wish there were only 250 work days a year.
How many additional billable hours would you accrue if you billed just six more minutes (1/10th of an hour) each working day?
25 billable hours!
Twenty-five billable hours may not seem like much, but when billable hour bonus thresholds differ by 50 or 100 billable hours, banking an extra 25 hours by working only 6 minutes more each day can make a big difference.
You can also extend the 6-minute rule if you are ambitious enough:
12 minutes extra per day = 50 additional billable hours
30 minutes extra per day = 125 additional billable hours
Over time, small daily efforts can add up to significant rewards.
Take Advantage of Other Hours that Count Towards Billable Hours
Some firms only count billable hours for promotion and bonus goals. Other firms allow lawyers to bank different billing categories towards their annual billable hours. These may include:
Pro Bono Hours
Diversity & Inclusion Hours
Recruiting Hours
Business Development Hours
Take advantage of these opportunities when you can. The firm includes these hours in billable hours because they believe these activities improve the firm overall. They can be a great way to break away from your typical work while positively improving your firm and your billable hours.
Some firms limit how many hours each category counts toward your annual billable hour goals. This billable hour tracker can accommodate those requirements.
Billable hours are hard to earn, especially when the hour thresholds are high. Work smarter, not harder! Knowing when you reach these limits can save you from working more than you have to. After meeting your billable hour limits you may choose not to participate in these above activities.
Plan Your Vacations
We all need vacations. Young lawyers especially need to take vacations. It is too easy to keep grinding every day without a break. When you are young, take advantage of your time off because time off is one of the best ways to avoid burnout.
When you can better see your past billable hours total and future projected hours, you can make more informed decisions regarding when to take vacations. It is much easier to take a week off from work and completely unplug when you know you have a 50-billable hour cushion to accomplish your goal. If you need every billable hour to reach your target hours, then instead of one long vacation, you may decide to take a few weekend vacations throughout the year to recharge.
How to use the Billable Hours Tracker
If you have not downloaded it already, you can access it here.
When you download it, Google Sheets will prompt you to make a copy. That copy is yours, and no one else will be able to access your tracker (including me).
Once you have downloaded it, you will find light blue boxes. Enter your firm billable hour policies and requirements in the top 3 boxes.
The first box is Minimum Hours Needed. This box is for the minimum billable hours you need for the year. If your firm requires you to work a certain number of hours for billing categories like Pro Bono hours or Diversity & Inclusion, you can enter them there.
The middle box is where you can add billable hour targets for your firm. Not all firms will have billable hours goals. In that case, you can use the tracker to ensure you work enough to meet the billable hours necessary for promotion. For lawyers with billable hour thresholds for bonuses, input the hours needed and the potential bonus amounts in the corresponding boxes.
The third box allows you to customize the tracker to the billable hour policies at your firm. Check the boxes for all billing categories that count towards your billable hour goals. If your firm limits how many hours count towards billable hours, you can input those limits too. Example: Your firm caps pro bono hours that count towards your bonus at 75 hours. Enter 75 hours in the corresponding box. The tracker will adjust your projection.
Once you have filled out these boxes, you can enter your billable hours for each month. Start in whatever month your billing cycle begins, and the tracker will adjust. You can add hours that do not count towards billable hours if you still want to track them. The tracker will only count other billing categories checked in the box on the right.
Finally, look at the “Projected Billable Hours Needed For” box to get a good idea of where you stand on billing for the year. This monthly calendar can adjust to show you the projected hours needed to meet your:
Minimum billable hours for the year
Minimum billable hours for a bonus
Each bonus tier that your firm has
As you add hours to the Actual Billable Hours table, the projections below will constantly adjust so you can better plan your hours for the year.
Additionally, as you add actual hours, you will see in the top row of boxes that it will estimate if you are “Behind Schedule”, “On Track”, or “Ahead of Schedule” on each of your billable hour goals.
Final Takeaways
Most young lawyers working in private practice will face some billable hour responsibilities. Lawyers who do not track their billable hours will always have a lingering sense of uncertainty regarding their hours and the goals set by their firm. To alleviate this uncertainty, this billable hours tracker is freely available for lawyers to use in their careers.
Tracking your billable hours will result in:
Clarity on your billable hours worked relative to your firm-specific requirements
Ability to determine which billable hours goals are realistic
A better understanding of how vacations and PTO will affect your annual billable hours
More work-life balance since you can better manage the hours worked each month to meet your goals
Opportunities to increase or decrease billable hours early in the year to make sure you achieve the goals you set out to
Developing Financial is dedicated to giving young lawyers the free tools they need to make better financial decisions. But tracking your billable hours is just one part of a financial plan. This accounts for a portion of your professional life, but billable hours aren’t a part of your personal life. To have a more comprehensive plan for your financial life, you may consider working with a financial planner. In addition to billable hours tracking, the Developing Financial Process also includes career planning and planning for partnership. Beyond professional planning, this financial planning process includes tax planning, investment management, saving/spending planning, and student loan repayment among other components. If you’re interested in learning more, schedule a free 30-minute Meet & Confer. This free 30-minute meeting is an opportunity to talk about your billable hours or any other financial questions you might have.
Disclaimer: Nothing in this blog should be considered financial advice or recommendations. Your questions are unique to you and your own personal financial circumstances. You should consult with a financial professional before making a financial decision. See full blog disclaimer.