In this solo presentation, Linda Artesani of Artesani Accounting critiques the traditional strict hourly billing model for law firms, highlighting that actual billable hours average only 2–3 per day according to the Clio trend report, which severely limits revenue potential. She argues that relying solely on hourly billing corners firms into a revenue ceiling and suggests a hybrid approach tailored to practice areas. Artesani outlines several alternative billing structures: fixed‑fee billing (especially for family law), evergreen retainers for business attorneys, and subscription billing for product‑based services. She emphasizes the need to monitor scope creep by tracking time against agreed‑upon fixed‑fee expectations and proposes incentive mechanisms—such as higher attorney compensation for quick settlements in personal injury cases—to encourage faster case resolution. Additionally, she advises firms to benchmark hourly rates against market competition before adjusting fees. The video concludes with a call to read a longer accompanying article and to subscribe to the channel.
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Hi there, Linda Artesani, Artesani Accounting. This week is all about the billable hour when working with law firms and how if we work hand in hand with our law firms, we can really look at the fact that if they're doing hourly billing and strictly doing hourly billing, that they might be putting themselves in a corner and really setting the place and a parameter, whether they've got 10 employees, 10 people billing time out, whether they're a timekeeper, a paralegal or an attorney, a staff attorney, they work 8 hours a day times 5 days a week. That's the maximum amount of revenue that you can earn because— You're doing the hours billable. And in the real world, nobody can bill out that maximum amount of time. There's always variables to that. In fact, I think it's about 2 to 3 hours if you look at the Clio trend report. That's all that's really billed out of an 8-hour day. So it's really— and it has a huge impact on how much revenue that you can bring into the firm. This is why we recommend, depending on the practice area, we recommend more of a hybrid method of tracking income and tracking, doing the billing for a billing process. And there's so many ways that a law firm can bill, and it really does work more towards the type of firm that you have in the practice area. That you're, you're with. For example, if you work with a family law firm, there's a lot of small amounts coming in on the door. That one sets itself up nicely for fixed fee billing because fixed fee billing, you can put a number on a divorce with a maximum amount of time allowed to be billed. And then you can set that up so it's even better for the client. They actually know what they're going to pay. So it's a win-win for both the client. You open up a door for better communication. And it's a win for the firm because now you've put a set amount on a specific task. Of course, you always have to watch for scope creep. You still have to track time. So we have to see how much time is actually being devoted to a matter and how much time was agreed upon in that fixed fee. So you'll do— track the hours and make them non-billable, but you'll still have that metric to go against the amount of hours that were expected in the matter. Including some incentives for perhaps making the matters move along. We see that on PI firms sometimes. There's metrics in place that if it can get settled at the initial insurance level, the attorney will make more money than if it drags on and goes on for 2 or 3 years in court. So it's something to consider. So there's— we, like I mentioned, the hybrid method where you might have a mix of fixed fee billing and then some hourly billing in place. Evergreen retainers work great if you're working with like a business attorney. You work with a lot of firms and they're going to pay you a specific amount. You ask for that one upfront retainer and it just gets refilled every month. That's another option that we're seeing a little bit more of with law firms. Subscription billing also works. If you, if you sell a specific product, you can do subscription billing where you, you kind of take the amount and spread it across maybe 12 months and bill a set amount per month to that client. So it's just a few of the ways that we, we see that are other options over attorneys just doing hourly billing where they're boxing them into this specific set number and they can't raise that threshold unless they raise their hourly rates. And of course, raising hourly rates is very dependent on your area and your competition. So you'll need to really do some research there, do some benchmarking. All of these things we do at our firm. So I hope this was helpful. There's a lot more detail in the article that goes with this, this video. So I hope you enjoyed this and I hope you subscribe to our channel. And until next week, we'll see you then.
