Edge International

The Erosion of the Billable Hour, or the “Dings”

Ariela Tannenbaum

All law firms determine and dictate the parameters of revenue: annual targets for billable hours and corresponding billing rate.

Then come the “dings” or revenue adjustments.

  • First ding: The number of recorded client hours is lower than target hours.
  • Second ding: Recorded hours are shaved by the partners before they make it to the client.
  • Third ding: The billing rate shrinks to the realized rate.

How much revenue are you giving away? What is the impact of all of these dings? And what is the year-over-year trend of these inefficiencies?

The table below is an illustration of the impact of all the dings. Reviewing this simple analysis on a regular basis is likely to significantly increase the efficiency of operations and enhance profitability.