billablehour

Key Takeaways from the 2025 Law Society Financial Benchmarking Survey

The latest Law Society (England and Wales) Financial Benchmarking Survey has sparked significant discussion on social media today. The findings highlight some critical financial challenges for mid-sized law firms, particularly in terms of profitability, chargeable hours and cash flow management.

📊 Top 3 Key Findings:

1️⃣ Fee Earners’ Costs vs. Fees Charged

The median hourly cost of a fee earner (based on 1,100 chargeable hours) was £123.40, while the median hourly fees per fee earner stood at £133.01.
🔴 93% of fees earned are being used to cover costs, leaving minimal margin for profitability.

2️⃣ Shortfall in Chargeable Hours

The average recorded chargeable hours per fee earner increased slightly to 773 hours (up from 765 in 2023).
⚠️ However, this is still well below the 1,100-hour target—a shortfall of over 300 hours per year per lawyer.

3️⃣ Increase in Lock-Up Days

Year-end lock-up days (including work in progress and debtors) rose from 143 to 146 days.
This trend indicates longer cash flow cycles, which can put pressure on a firm’s financial stability.

🚨 What Should Law Firms Do?

These figures underscore the urgent need for better financial planning, sustainable profitability strategies, and operational efficiency. Some key focus areas include:

✔️ Improving revenue streams—exploring retainer-based models for better income predictability.
✔️ Enhancing productivity—have a robust and actionable business development plan for all lawyers!
✔️ Optimise cash flow—reduce lock-up days by streamlining billing and collections processes.

🔗 Full Report: Read the Law Society Financial Benchmarking Survey 2025

📢 Looking to bridge the 300+ hour gap per lawyer? Or interested in strategies for growing a profitable legal practice sustainably? Let’s talk! Get in touch today.

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richard@gsjconsulting.com.au

Thomson Reuters Releases 2024 Midyear Update on the Australian Legal Market – Key Takeaway

Earlier today, the Thomson Reuters Institute published its Midyear Update on the Australian Legal Market, providing valuable half-year insights into industry trends in the Australian legal market.

There’s a lot to unpack in the Report, and I highly recommend you download it. That said, here are my top takeaways:

✅ What’s Happening with Non-Equity Partners?
Is there an underlying story in the Non-Equity Partner segment? The data suggests there might be more to explore.

✅ Equity Partners Carrying the Load?
If legal market demand and worked rates are up in 2024, yet the average billable hours per lawyer are down, it raises a big question—are Equity Partners absorbing the extra workload? If so, why?

✅ Billable Hours Decline
With 12 months in a year, many law firms have lawyers billing less than 1,500 hours annually. What does this mean for profitability and productivity?

If you’re looking to refine your pricing strategy or need guidance on law firm profitability, feel free to get in touch. In the meantime, download the two-page update and see the data for yourself!

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𝐁𝐢𝐥𝐥𝐚𝐛𝐥𝐞 𝐡𝐨𝐮𝐫𝐬 𝐭𝐚𝐫𝐠𝐞𝐭𝐬 𝐟𝐨𝐫 𝐟𝐢𝐫𝐬𝐭-𝐲𝐞𝐚𝐫 𝐥𝐚𝐰𝐲𝐞𝐫𝐬 𝐚𝐭 𝐬𝐞𝐥𝐞𝐜𝐭𝐞𝐝 [Australian] 𝐥𝐚𝐰 𝐟𝐢𝐫𝐦𝐬

As we start out on 2025, the 𝑨𝒖𝒔𝒕𝒓𝒂𝒍𝒊𝒂𝒏 𝑭𝒊𝒏𝒂𝒏𝒄𝒊𝒂𝒍 𝑹𝒆𝒗𝒊𝒆𝒘 (AFR) has helpfully published a table today (14.01.2025) – ‘𝐁𝐢𝐥𝐥𝐚𝐛𝐥𝐞 𝐡𝐨𝐮𝐫𝐬 𝐭𝐚𝐫𝐠𝐞𝐭𝐬 𝐟𝐨𝐫 𝐟𝐢𝐫𝐬𝐭-𝐲𝐞𝐚𝐫 𝐥𝐚𝐰𝐲𝐞𝐫𝐬 𝐚𝐭 𝐬𝐞𝐥𝐞𝐜𝐭𝐞𝐝 𝐥𝐚𝐰 𝐟𝐢𝐫𝐦𝐬’ – that makes for very interesting reading.

Other than the expected billable hour targets for first year lawyers and comments on alleged “under-billing” practices at major Australian law firms, what caught my attention in the article was this comment:

“𝘖𝘯𝘭𝘺 𝘰𝘯𝘦 𝘧𝘪𝘳𝘮 – 𝘏𝘢𝘮𝘪𝘭𝘵𝘰𝘯 𝘓𝘰𝘤𝘬𝘦 – 𝘤𝘢𝘭𝘤𝘶𝘭𝘢𝘵𝘦𝘥 𝘪𝘵𝘴 𝘵𝘢𝘳𝘨𝘦𝘵𝘴 𝘥𝘪𝘧𝘧𝘦𝘳𝘦𝘯𝘵𝘭𝘺, 𝘸𝘪𝘵𝘩 𝘢𝘯 𝘦𝘲𝘶𝘢𝘵𝘪𝘰𝘯 𝘣𝘢𝘴𝘦𝘥 𝘰𝘯 𝘳𝘦𝘷𝘦𝘯𝘶𝘦 𝘳𝘢𝘵𝘩𝘦𝘳 𝘵𝘩𝘢𝘯 𝘩𝘰𝘶𝘳𝘴 𝘣𝘪𝘭𝘭𝘦𝘥. 𝘓𝘢𝘸𝘺𝘦𝘳𝘴 𝘢𝘵 𝘵𝘩𝘢𝘵 𝘧𝘪𝘳𝘮 𝘢𝘳𝘦 𝘦𝘹𝘱𝘦𝘤𝘵𝘦𝘥 𝘵𝘰 𝘣𝘳𝘪𝘯𝘨 𝘪𝘯 𝘧𝘰𝘶𝘳 𝘵𝘪𝘮𝘦𝘴 𝘵𝘩𝘦𝘪𝘳 𝘴𝘢𝘭𝘢𝘳𝘺 𝘪𝘯 𝘤𝘭𝘪𝘦𝘯𝘵 𝘧𝘦𝘦𝘴.”

I might be wrong, but in the event that Hamilton Locke charges clients by the billable hour, then I highly suspect this also translates into a yearly hourly target…

…In the event that HL charges clients fixed fees or some other type of fee arrangement, then I accept this calculation probably sets it apart.

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Allied Services

One of, it not THE BIGGEST problems with the billable hour💲is this: you don’t make any money 💰 when you and your team is sleeping 🛌.

So how can you ‘fix’ 🔨 this?

One way is to have a team that doesn’t sleep 💤 – go global!

Another way is to write a book 📖 and hope you’ll make your millions on the royalties 🤑 (and that can work, ask John Grisham).

ALLIED SERVICES

But, a more recent trend, is for law firms to offer clients what are known as “allied services” – or “adjacent services“.

Only, in most cases, there is absolutely no aligned or adjacent service being offered.

So, what is the point of this post?

Well here is a tender✍ for an allied/adjacent service lots of law firms really could be offering their clients:

‘Provision of Annual Member Meeting Services (AMM)‘.

It’s not legal work, but boy does it have adjacent opportunities.

https://lnkd.in/gq8ubVF2

And how many law firms out there don’t have events teams who are experts in project managing and holding events that they could monetarize the expertise of while leveraging and cross selling other ‘allied services’ – such as their lawyers?

Value Added Services

Bet I can guess on one hand how many law firms will go for a tender like this because this is a ‘free’ value added service.

Big mistake.

Get in touch if you want to chat about the “allied services” your firm is offering.

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