Recently I received an email from a partner at a mid-sized defense firm about billing and marketing.
We are a defense litigation firm with a billable hour requirement for partners and associates. We are struggling right now with finding the balance between a good billable hour goal while keeping enough time to effectively market our individual practices. Right now we require partners to bill 2000 and associates to bill 1900 annually. Time spent marketing is generally not billable and given these requirements there is very little time left for marketing. If you have any insight into where a good balance might lie for a 30 attorney defense firm, I’d be interested in reading that.
Which seemed like a good question to pose to the Insurance Defense channel in LawyerSmack. Especially because recently there was a conversation in LawyerSmack about what associates want out of their law firms that ended up in an article for the ABA Journal. So here is a brief bit of conversation about the above question, followed by some detailed individual answers. And if you have a question you want to ask the LawyerSmack
hooligans peanut gallery, fire away.
Erica [12:56 PM]
I’m not entirely clear on what they’re asking for. Do they want associates’ input about how to structure their billing ?
Nate [12:57 PM]
I feel like 1800-1900 is p/standard for associates as a target
Erica [12:57 PM]
Or am just simple?
keithrl [12:57 PM]
I think they want to know how to market while also hitting billable goals.
Maybe they feel 1800-1900 is too high given their region?
Erica [1:00 PM]
My current firm requires 2000 but doesn’t encourage (or as far as I can tell wants) us to market
Jess [1:01 PM]
I used to work at XXXXXXXX, which is a large midwestern firm. I was in the labor and employment group, but did the odd insef case or two, which is why I like to lurk in this channel. It brings back memories. Associate billable goal was 1900 when I started and then went down to 1850 or maybe 1800. And it was a goal, not a requirement. The firm wanted senior associates spending more time on marketing and expected that senior associate billable hours would be less the more senior they got. We tracked all non-billable hours and the firmed looked at that closely during evaluations.
Partners hours expectations were in the 1500 to 1600 range, but if you collected tons of fees, 1300 was closer to the expectation. Partners were expected to bring in business. It tends to be an eat-what-you-kill firm.
Erica [1:01 PM]
My prior firm wanted ~1900 but gave us credit for marketing
Rob [1:01 PM]
We are collections, not hourly. Too many flat fee cases. Collections goal is roughly 3x salary.
Marketing Resources and Bonuses
Nate [1:02 PM]
To encourage marketing they should:
- offer to pay for events and orgs and be flexible on people leaving if they are not already
- Offer a set benefit/origination for bringing in business
perceived value will offset distaste of putting in non-credited time
keithrl [1:03 PM]
Origination is a key point
Jess [1:03 PM]
XXXXXXX was similar to the 3x salary. We did a lot of flat-fee work, too, in the labor and employment group.
Nate [1:04 PM]
Also what’s their bonus structure? I’ve seen 2x salary and a % for every dollar of revenue after that.
keithrl [1:04 PM]
It also sounds like they don’t have a cohesive firm-wide marketing strategy and just let individual lawyers do whatever – which is unfortunately how most small to mid size firms work.
Nate [1:04 PM]
Mid-sized firms are awful, as someone who has been at several. Once you start getting more regional it gets slightly better
Jess [1:05 PM]
We also got a “marketing fund”. I want to see it was around $300-400 for junior associates and like $500-600 for senior associates when I left in 2008. And if you needed more, they would give it to you.
Nate [1:05 PM]
Yes, that’s another good point, let them know what resources they have.
keithrl [1:06 PM]
Yep, often times associates don’t know they have resources or feel uncomfortable using them.
Finders / Minders / Grinders
Mike [1:07 PM]
Seems strange that the partners have higher hours requirements than associates. I would think they should be focused more on marketing/leveraging associates
keithrl [1:10 PM]
Yeah, Jenn’s structure above makes more sense.
Finders / Minders / Grinders – Why are partners grinding more than associates?!? Seems like they’re poor at utilizing leverage.
Kate [1:11 PM]
My old firm was like that: 160/month requirement for 1-3 year associates, 170 for 3-5 year, added partner track, and your hours became 180/month as a jr partner. Only certain people got “credit” for non-billable time entertaining clients, but they only had 3 main clients and they were very protective of them, so only 2 associates were allowed to go to any bizdev functions with the clients and the rest of us were discouraged from developing clients because it would detract from our focus on the main 3.
Rich [1:16 PM]
Kate I’ll be glad to poach them, if it’ll give you any amount of schadenfreude.
Kate [1:16 PM]
All that to say, I don’t think 1900 is unreasonable but it depends on the market. My requirement right now is 2000 and I’m at a big firm.
Jess [1:17 PM]
Our managing partner used the finders/minders/grinders mentality all the time. He was a huge finder and needed both minders and grinders to do the work. He’d split his fees appropriately, too, encourage all of it.
Kate [1:17 PM]
Rich – OMG if you did….one client is about to jump, but they were more trouble than they were worth.
Erica [1:29 PM]
Alright I added my 3 cents below. I still feel like we need some follow up questions answered to give a meaningful response.
Rich [1:30 PM]
Yeah, like do they want to make me a partner? Because I can be bought.
keithrl [1:30 PM]
Erica [1:31 PM]
Kate [1:31 PM]
Rich / 6th year associate / Mid-Size InsDef Firm
How much time associates should spend marketing is going to vary WIDELY from firm-to-firm and one practice area to another. I would venture to guess I (6th year associate) spend more time working on marketing than any other InsDef associate I know of. I think I’ve been given this opportunity because it’s yielded results over the past couple of years. I market with partners and other associates who I am comfortable with (both from a business philosophy perspective and who I know won’t try to snag business). I have used both traditional marketing methods and been creative in my approaches to marketing, both of which have been successful to some extent.
The billable quota for associates is 160hrs/mo (1920/yr) with a bonus structure built in for hours billed over the minimum amount. This has been an effective incentive for me and other associates. My firm allows me to keep track of billable time and apply it toward my hourly goals, but realistically, I only write down the big things (even though it would be to my advantage to write down every single thing).
Partners at the firm do not have a billable requirement. They eat what they kill, essentially, so their earnings largely do not affect other partners.
Erica / 5 yr Associate / Panel counsel firm in CA
Firm #1 was a smaller firm (10-15 attorneys) that did work throughout California. They had a dedicated marketing professional that was available to all attorneys at the firm, required all attorneys to formulate an annual marketing strategy with budget, and gave all attorneys billable hours ‘credit’ for marketing time. The idea was baby lawyers participated in local bar associations, attended CLEs and talks, and generally just learned how to network. As time went on, the expectation was that the attorneys would start giving CLEs, participating or hosting events through organizations aimed at insurance companies (ie DRI, CLM etc.) and thus marketing directly to adjusters and insurers. The firm required ~1900h in billables for all attorneys, with a bonus structure starting at 2000.
Firm #2 is a mid-size firm (~55 attorneys) that does panel counsel work and flat fee work for insurance companies in the Southwest. That firm required 2000 hrs and the bonus structure started at 2200 hours. That firm did not require, or even really encourage its associates to engage in marketing or business development. It paid for associates’ memberships to local bar associations and ASCDC but that’s all. However this firm had an account with a very large auto/home insurance company. All attorneys who worked on the account were required to attend periodic ‘meet & greets’ with the insurer’s adjusters, attend seminars on latest litigation strategies/developments and the (mostly junior) partners were extremely attentive to the wants/needs/desires of its upper management.
Determining the best balance between billable hours and marketing probably depends on both the current structure of your incoming work and what the firm wants that to be in the future. Both firms discussed above were panel counsel on straight litigation cases primarily and did very little subrogation, flat fee, or collection work. If a firm is looking to land a large insurer’s account then that will demand a different strategy than if the desired result is for individual attorneys to cultivate relationships with adjusters who will send them cases.
As for employee satisfaction, if you’re demanding 2000 hours and not giving credit for marketing then expecting those associates to spend even more of their free time marketing will require some meaningful incentive. [Personally, I’m willing to accept a 2000 hour requirement but will brook no incursions into my off-time, even if it would help me make partner.]