North American based software company, Clio has released its third annual Legal Trends Report which analyses anonymous billing data of almost 70,000 legal professionals. It has found that the average fee earner is billing only 2.4 hours per working day. The average hourly billing rate was US$267 per hour.
While 2.4 hours per day may seen shockingly low, it is in line with Clio’s previous years’ analysis and therefore indicates a ‘structural’ issue within the legal services market in North America. Firms using Clio are typically small and solo firms.
Taking into account that only 81% of billable hours are billed (due to write downs and discounts) and 85% of the value of invoices are actually collected, the effective billable hours is 2.4 x 81% x 85% = 1.65 hours.
For the first time in its annual Legal Trends Report, Clio surveyed legal consumers.
According to the 2018 Legal Trends Report, which surveyed over 1,300 consumers, only 65% of individuals who faced a legal problem in the past two years ended up hiring a lawyer. Of those who faced a legal issue in the past two years, 68% communicated with a lawyer whom they didn’t hire, and 58% had a formal consultation with a lawyer they didn’t hire.
When it comes to avoiding legal solutions altogether, consumers report factors related to cost as the most common for avoiding the legal system. While 31% agree that using the legal system costs too much money (even when the benefits justify the cost), 35% believe the end benefits don’t justify the cost. For 28%, not knowing the final cost is a barrier. While cost is a major barrier to exploring any type of legal solution, other factors have a stronger influence on the overall preference to hire a lawyer. Many consumers are looking for do-it-yourself solutions, better outcomes, or easier processes—which all rank as high-impact indicators.