Nearly half by over 10% ⏰
The vast majority of big UK law firms have increased billable hours targets for their lawyers, new research has found, as they look to maintain profit levels in the face of rising write-offs.
A whopping 98% of UK outfits surveyed said they had increased target hours for lawyers, with nearly half (47%) doing so by over 10%.
The Legal Cheek Firms Most List 2023 provides a breakdown of billable hours targets across all the major outfits, with figures ranging from a high of 2,000 to a low of 800. It’s worth noting some firms choose not disclose these, while others say they don’t set them at all.
The rising targets come as almost two thirds of outfits (64%) said billing write-offs (work it accepts it’s not getting paid for) were on the rise. Nearly half (48%) revealed this had increased by 10%.
So what’s causing this “profit leakage”? Well, according to BigHand, the tech firm which carried out the research, the biggest issue is standard rate discounts (suggesting firms are facing greater pricing pressures), followed by write-offs and discounting to collect payment.
The research found that much of this leakage is down to firms being unable to “prove the work done on each matter”, with nearly a quarter of UK outfits (24%) admitting to missing time or entering time late, and 21% confessing to missing or late disbursement entry.
“As a result,” researchers said, “too many firms are leaving themselves wide open to client demands for discounting and write-offs”.
In a bid to address this, 26% of UK firms said they plan to improve billable time entry over the next two years, while 24% will improve financial data visibility to gain insight into the issues that are leading to profit leakage.
A whopping 93% of UK respondents confirmed they now employ data scientists in response to client demand for greater financial transparency.
The findings were based on 800 responses from from senior legal finance roles, CEOs and managing partners at UK and US law firms with 100 lawyers or more.