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Why Law Firm Managing Partners Should Bill Fewer Hours

If the managing partner of your law firm regularly bills 150 hours per month or more, they are not spending enough time managing the firm. This is particularly true for boutique law firms, where the value of many managerial decisions far exceeds even the highest hourly billable rate. Moreover, regardless of its size, if you want to grow your firm, make sure managing partners limit their billable hours. Having an annual billable hour target anywhere near 1800 makes sense for mid-level and senior associates, but it’s a sure way to stagnate a firm if the managing partner is billing that much. 

 

From Billing to Building 

At the beginning of your career, lawyers are told to bill, bill on time, and then bill some more. Billable hours become synonymous with doing a good job so much so that some firms describe managerial and administrative duties as “non-billable” time. Therefore, it’s not surprising that, as lawyers progress through their careers, many continue to believe that consistent billing hours show their value or maintain revenue stability. This mindset is counterproductive 

 

When you’re spending all your time on client work, who is focusing on the firm’s overall direction? Who is ensuring operations run smoothly, identifying staffing and recruiting needs, or working on business development? Who is thinking about where the firm should be a year from now? These are responsibilities only a managing partner and other firm leaders can handle effectively. 

 

Changing the belief that billing is the most valuable contribution is key. Logically, this means you should think of yourself less as a high-performing attorney and more as a strategist guiding the firm to new heights, but the transition can be very uncomfortable. After all, you’ve spent your career measuring productivity by the hour, so letting go of that metric can feel like losing something. The challenge is psychological as much as it is practical; there’s a constant fear of missing out on revenue or what could happen if you are not being “hands-on” with clients.  

 

To combat this, leaders need to embrace a broader definition of success—one that prioritizes the firm’s profitability, growth, and culture over individual work output. Specifically, many law firm partners undervalue the economic importance of sound managerial decisions, and the time needed for them.  For example, the value-per-hour of deciding whether to hire a new lateral partner or whether to open a new office far exceeds the managing partner’s hourly billable rate. But few lawyers recognize this. Thus, bridging this gap requires dispelling some common misconceptions about what it means to lead an entire firm to success. 

 

How to Break a Bad Habit 

As we mentioned, a major obstacle here is the fear of lost revenue. The idea of reducing your billing hours might sound like a direct hit on the firm’s bottom line, but that’s a short-term perspective. Delegating more client work and spending time on business development, management, and strategy positions can drive profitability beyond what an individual can achieve through $600-an-hour cases alone. 

 

Another obstacle is trust. Many leaders hesitate to delegate client work because they fear that no one else can handle it with the same level of competence. While this concern is valid, it might point to a deeper issue with the talent development pipeline of the company. If you feel like you are the only one capable of doing the work, focus on why that’s the case. The only sustainable way to double revenues and to double them again is to build a strong, capable team that allows you to step back from client work and focus on the bigger picture without the nagging concern that quality will slip. It’s all a matter of leveraging the strengths of the collective, not just your skills. 

 

Finally, another challenge is the fear of losing control. When leaders step back from the day-to-day client work, they might worry that they’re losing touch with the core operations of the firm. However, this can be addressed by implementing effective systems and processes that ensure consistent quality and client satisfaction, which not only helps in retaining control but also empowers your team to contribute more effectively, supporting the firm’s long-term goals and growth. 

 

How to Start Billing Fewer Hours 

As consultants to law firms, we have firsthand experience helping to manage and equity partners take on a managerial approach to their positions. There are proven strategies that help partners use their time more effectively. For example: 

 

  1. Start Small: Don’t go cold turkey on billing. One technique is to start your day by devoting 30 to 60 minutes to identifying what other people in the office should be doing. The easiest way to do this is to block off time on your calendar and use that time to communicate with other attorneys. This is a gradual approach to elevating the importance of law firm management.  
  2. Delegate More: Trust your team with more work. Delegating doesn’t just free up your time; it can help your associates and junior partners to learn your more complex responsibilities. However, delegation doesn’t mean dumping work and hoping for the best. The most important aspect is to identify tasks that come up repeatedly. Too many lawyers try to delegate tasks that don’t come up often enough for the person to whom the task was delegated to show improvement. It requires clear communication, oversight, and feedback loops to ensure the quality remains consistent.
  3. Track Non-Billable Metrics: If you’re used to measuring success through billable hours, replace that metric with new ones. Focus on Key Performance Indicators (KPIs) such as business development, marketing, staff retention, recruitment, and strategizing. When your time tracking systems include these categories of activities, you can track them. Your accounting team can run a report that shows you only spend 5 hours a month on strategic thinking. Armed with that knowledge you are more likely to do more in the future. 
  4. Invest in Systems: Refining the firm’s processes and systems is time well spent. Law firm leaders often underestimate how much impact they can have by improving workflows, technology adoption, and client communication practices. Specifically, law firms tend not to have written standard operating procedures or policies, which contributes to lawyers saying the same thing to their staff over and over. These operational improvements free up time across the firm, enabling you (and your team) to be more productive without over-reliance on personal billable hours.  
  5. Prioritize Profitability: Growing your client base and increasing firm profitability aren’t tasks that happen during the spare time between client matters. They need focus and attention. In fact, profitability is the single best measure of managerial success. And once you focus on profitability it becomes obvious that the best way to achieve it is to do something other than having the managing partner bill ten more hours a month. 

 

The Hurdle of Letting Go 

The main thing to have in mind is that this shift isn’t just a matter of logistics; it’s about letting go of the need to feel indispensable. Many law firm leaders have a deep-seated belief that the firm would struggle without their contribution to client work. While this may have been true when you were building your book of business and contributing more directly to revenue, it’s no longer the case. The strength of the firm should not rest on your shoulders alone.  

 

It can be difficult to step back when client work is your comfort zone but remember: your role as a leader is not to maintain the status quo; it’s to ensure the firm’s growth, stability, and longevity. Build a team and systems that you can trust. In the end, billing fewer hours doesn’t mean doing less. It means doing more of the things that make the firm stronger, more profitable, and better positioned for the future.  

 

So, take a step back from the hourly grind and focus on the big picture. 

The American Bar Association First Ethics Opinions on AI

Artificial intelligence is an increasing concern in the law industry, even if most lawyers do not recognize the true extent of its potential impact yet. To that end, the American Bar Association offered some guidance regarding the ethics of using Generative AI tools, with the publication of Formal Opinion 512, in July. Their restrained approach to the topic is eye-opening, which might not fully capture the profound changes AI will bring to the industry at large.  

The main points of Opinion 512 cover “the growing use of Generative Artificial Intelligence (GAI) in the practice of law, pointing out that model rules related to competency, informed consent, confidentiality, and fees principally apply.” On that last topic, the ABA suggests that lawyers should not charge clients for the time spent learning how to use Generative AI, as maintaining competence is part of their professional responsibility. However, if a client specifically requests a GAI tool that the lawyer is unfamiliar with, the lawyer could bill the time needed to learn it, but only if both parties agree on the new billing terms in advance. 

If we leave it at that, it seems more than a reasonable opinion. However, the ABA is being very conservative in its view of a technology that will fundamentally change how law services work and are billed. On one hand, lawyers might start to simply charge more flat fees instead of hourly billing out of practicality, hoping to avoid the complexities of tracking time spent on learning and implementing AI tools. 

On the other hand, flat fees can also fail to account for different levels of complexity in any given case. As AI continues to evolve and become more integrated into the legal market, the gap between the time saved by AI and the flat fees charged may widen. Lawyers could either overestimate AI’s efficiency and undercharge for their services or underestimate it and overcharge clients, causing potential disputes. 

Moreover, the flat fee approach might discourage lawyers from investing time in mastering Generative AI tools without a direct financial incentive to do so, stifling innovation and slowing down the adoption of AI in mid-sized law firms. And those who do invest the time might find themselves at a competitive disadvantage if they are unable to recoup those costs. 

But that’s just part of the issue. Looking at the big picture, the ABA’s current stance could soon become a relic from a bygone era, not fully addressing the potential for AI to make certain legal services obsolete, changing the way many law firms currently operate. As AI tools become more capable and sophisticated, handling tasks that were previously billable hours for lawyers could disappear across the board, forcing law firms to reconsider their entire structure, from pricing, to staffing, to client dynamics. And there is a lot of work to be done to get there. 

For example, junior associates or paralegals often spend hours sifting through documents to identify relevant information for a case. With Generative AI tools, this process could be completed in a fraction of the time, challenging the existing business models of the law firms that rely heavily on the revenue generated from these time-intensive tasks. 

AI’s impact on legal research also could further disrupt traditional billing practices. AI-powered tools can rapidly analyze case law, statutes, and legal precedents, providing lawyers with precise results in a much shorter timeframe. In the near future, it might even be able to predict case outcomes or even generate legal arguments, further diminishing the need for extensive research hours. This would certainly benefit clients in terms of cost but could pose significant challenges for traditional revenue models. 

All in all, it’s worth reviewing and seeing what regulatory bodies are thinking, and the ABA’s cautious approach doesn’t fully acknowledge the broader implications of this technology. By focusing on competency and billing for AI-related tasks, the transformative potential of AI in reshaping legal services gets overlooked. This may be sufficient for now, but as these technologies evolve, the industry will need more forward-thinking policies that address not just how lawyers bill for their time, but also how they redefine value in a landscape where human expertise may no longer be the sole currency. The challenge moving forward will be to create practices that are as dynamic and adaptable as the technology they are meant to accommodate. 

The Right Way a Law Firm Should Organize Its Invoicing and Collections Processes

Lawyers are bad at being paid on a timely basis. According to a 2023 report published by Clio, concerning mid-sized law firms: 

  • 11% of legal fees go unpaid on average across the industry. 
  • The average time gap between sending an invoice and getting paid in full is 52 days.

This tells us that most law firms don’t recognize that even seemingly modest reductions in the payment cycle will make a large impact on cash flow. However, in our experience, many of the most egregious problems can be avoided by changing one aspect of the invoicing and collection process.  

Too many firms create a general system and then expect specific cases to fit neatly into them, treating them as being uniform or very similar. That approach is fatal to effective collections and to avoid increasing your accounts receivables. Treating every client as fungible is like betting the same amount on every poker hand. 

A better and more effective approach is to treat clients not as uniform but as essentially and predictably variable.  Some clients are more likely to have problems paying you on time; for example, for practice areas like Family law, it’s common to see cases dragging longer than expected, with an increasing emotional and financial toll that needs to be taken into account, especially when the result is not shaping up to be what the client wants.  

Thus, the best systems identify these red flags and adjust to them. You need collection systems that measure and vary alongside the risk of non-payment. This allows your firm to be proactive about the issue, creating strategies to deal with potentially problematic clients from the very beginning. For high-risk clients or cases, consider requiring a larger retainer upfront, getting paid in full before any court decision, or setting shorter payment deadlines with more frequent, even daily, billing intervals. 

In other words, client management is an important part of the collection process, and lawyers should be more sensitive to the risks of non-payment that every client can present. Technology can be a key aspect to streamline this. Billing software can automate reminders, track payment deadlines, and provide clients with easy-to-use payment portals to reduce the administrative burden on your firm. And they can also provide valuable insights into payment patterns, helping you refine your risk assessments over time. 

The bottom line is that a well-organized invoicing and collections process is key for your law firm’s cash flow and overall financial stability. Start recognizing the variability of your client’s payment behavior and maintain clear communication to significantly reduce the risk of non-payment. After all, a law firm that is diligent about its own financial health is better positioned to serve its clients effectively.