Underbilling & Overworked: The Non-Billable Hour

Regardless of firm size, every lawyer has tasks that are not billable to a client. Whether it is onboarding a new employee, attending the annual meeting for insurance open enrollment, or attending a networking event, there are many things that take up time but are not realized on the bottom line. Firms that bill on a hourly basis enforce their requirements expectations of attorney's billable hours without consideration for membership in voluntary bars, membership on committees, or even teaching class as an adjunct. The remaining "working" time is expected to be spent on client matters, generating fees and profits. So, the lawyer invested in their professional development must cut time from their personal life or turn down professional opportunities to make up the lost billable time. This issue is nothing new, but is especially prevalent in insurance defense work, where hourly fees are already below average for the legal industry.

In insurance defense, firms enter into agreements to provide their services to insurance companies (and/or its insureds) for set hourly rates based upon an employee's title. Typically, there are distinct rates set for partners, associates, and paralegals. In exchange for low rates, firms are all but guaranteed a steady flow of work from the insurance company. Due to the low rates, insurance defense firms must keep overhead low and make a choice to (1) take on a high-volume case load, (2) overbill, or (3) both. Those at the top of these firms must ensure their staff are billing adequate fees to keep the lights on, salaries paid, and, of course, generate a profit. Thus, pressure is applied down the chain to bill, bill, bill, accept every case that comes through the door, and preferably, all of the above. Quality of work and case outcomes are important, so long as cash continues to flow.

The many issues specific to insurance defense practice and billing are interesting and warrant posts of their own. But, they provide critical context for the issue of attorney professional development in insurance defense practice. With those expectations, where is there time for PD, or even just meeting CLE requirements? As written about at length by many, the billable hour system is broken, but also seems to be irreparable. So, as I become an attorney in the (hopefully near) future and will likely work somewhere with a billable hour, I wonder -- what will I have to sacrifice to invest in my profession during my first few years as an attorney? Skip dinner with friends? Seclude myself to a home office rather than watch TV with family? Dictate pleadings while walking my dog to make up lost billable time? This appears to be the reality which the legal profession has come to know and ultimately has come to accept.

I have personally worked for two insurance defense firms and have spoken to colleagues who work at several other firms with billable time. The content of this post is in no way reflective of any particular firm or experience, and is rather an assimilation of what I have learned from speaking to colleagues and attorneys.