The revenues of a law firm comes from what we call “billables.” This term refers to the input of lawyers (or staff) on a matter which clients pay for. Alas, not all input is billable – services rendered but not charged to clients are thus called “unbillables.”
The unbillables can be divided in three categories: overhead, administrative and compliance, and professional competency and development.
1. Overhead
This refers to costs of operation that can’t be attributed to individual cases. Typically, overhead would include the following:
- rent
- telephone
- internet
- utilities
- equipment
- furniture
- subscriptions
- bank charges
- credit card processing fees
- insurance
- professional association membership dues
- supplies
2. Administrative tasks and statutory compliance
This refers to administrative tasks and compliance duties required to keep a law firm running smoothly. For example, the following items generally fall under this category:
- bookkeeping tasks
- opening and closing files
- billing and collection
- internal filing
- law firm meetings or staff meetingsor partner meetings
- staff training
- statutory reports to the Law Society or the governing body
- file and data storage
- mandatory professional liability insurance
- Law Society (or the governing body) dues
3. Professional competency and development
As lawyers, we are expected to be reasonably familiar with the law and its latest development. For example, a family law lawyer is expected to be familiar with the law on divorce, child support, spousal support, custody and access, and property division. If a lawyer needs to review the basic legislation prior to answering an inquiry, time spent on reviewing is likely unbillable. Likewise, time spent on learning new developments in the law is generally not billable.
