I really don’t understand the reason why firms say if you don’t hit or go over your billable hours then you are not profitable to the firm. It’s a crock of 💩 IMO. For example, if a firm paid associate 110k for 1950 hrs required. Let’s say that an attorney only billed 1850 & on average let’s say a client pays $250 an hour, that’s approx 462k revenue minus associate pay (110k), that’s approx 352 profit. How is that associate “not profitable.” The math isn’t mathing folks.

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Agree. They should qualify as you aren’t able to generate the level of profit that they want to sustain whatever crazy high level of PPP they want, which even adjusted for inflation, is many times what the average firm had back in the 80s.

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Yep

Subtract Malpractice insurance, operating costs and overhead and see what’s left.

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AD1 yep plenty. It’s not *that* expensive. I was up for partner at a small firm with lower billable rates (like $350 for partners with 40+ years of experience for cases that weren’t contingency or flat fee) and got access to some portions of the books during that trial period. There was still a lot of money made even on junior lawyers who didn’t bill “that many” hours when taking operating costs, insurance, support staff, supplies costs, clients that didn’t pay their bills, etc., out of the equation.

likehelpful

This is also assuming 100% realization on those hours, which is usually never the case, and not accounting for health care, benefits, insurance and other costs.

Also, the decision isn’t always strictly by the numbers, for example when a firm needs to make cuts for cost, the less profitable associate that is important for capacity in a more important practice will be safer than a relatively more profitable associate in a less important practice (or for less important Ps).

Your point in valid, but I raise these considerations as things are rarely as straightforward as they seem.

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