# Lawyer Hourly Rate Calculator

Figuring out what to charge is hard when you are just starting out. It is made harder by bar associations, which are wary of allowing any discussion of fees on their discussion lists.1 But whether or not you are going to charge hourly rates, you need to know what your time is worth.

You can get a feel for the going rates in your town by asking other lawyers what they charge, but I think it is better to start from your bottom line: what do you need to make, and what hourly rate will get you there. If the market will bear a higher price, great! But if the going rate is lower than you need, you might need to go back and work on your business plan.

To find out the hourly rate you need to charge, use this calculator.

If you want to know how we arrived at that hourly rate, here’s the equation:

`( ( Income / .7 ) + ( Expenses * 12 ) ) / ( ( Hours / 5 / 3 ) * 241 )`

In other words, first, we are putting your taxes back in, using 30% as a rough estimate of your tax rate. Then we add expenses. That works out to the total amount of money you need to make in a year, which we divide by the number of hours you want to work in the workdays available in a year2 divided by three. We divide by three because you have three jobs: lawyering, marketing, and business administration, and each of them take about the same amount of time. In other words, you can only bill about one-third of your time.

This is a rough estimate of the hourly rate you need to charge, obviously. But it’s also a fairly conservative estimate. If you do need to take home the amount you enter in the first box, you really shouldn’t try to bill less than the result you get. The numbers won’t add up.

## What to Do if Your Rate Seems Low

Let’s say you’ve been asking around, and most lawyers with your skill level are billing out at \$250, but the calculator says you only need to bill yourself out at about \$125 to hit your revenue target. You could just bump your rate to \$250 in order to go with the market, and just work less. Of course, then you will be competing for the same clients like everyone else billing at that level.

What you should also consider, if your rate seems way lower than what you’ve learned from asking around, is that you might be able to market to a relatively untapped client base. The access-to-justice gap is huge, and if you can charge half the going rate and still meet your income target, why not give it a try? You might have an easier time getting clients that way.

1. This is primarily due to Goldfarb v. Virginia State Bar, in which the Supreme Court found the Fairfax County Bar Association’s minimum-fee schedule for title examinations constituted illegal price-fixing.

2. 365 days minus 2 weeks for vacation, 100 days for weekends, and 10 federal holidays equals 241 workdays.

1. Useful article. I would add that attorneys also need to be as efficient in their practice. Reducing the time spent on things such as business administration, as much as practically possible, goes a long way towards increasing one’s overall earnings. Many attorneys, unfortunately, neglect the business side of their practice and ignoring it results in additional admin time being spent to put out business related fires which could have been prevented. If attorneys can get their admin time down then they can charge a lower rate, reached the “untapped market,” you mentioned and actually still have a higher income.

• Paul Spitz says:

Most of the admin tasks can be handled pretty efficiently. I’m thinking of bookkeeping and accounting, filing, etc. The biggest time-suck is generating new business, but you can’t delegate or avoid it. You have to do it. And you end up spending a lot of time schmoozing and kissing frogs, to get to that handful of prospects that will actually sign your engagement letter and pay a retainer.

• Agreed that the admin tasks can be handled efficiently Paul. What can be done, and what actually happens, aren’t always the same thing though. Quite a few attorneys manage to keep their office an administrative mess and, as a result, put more time than necessary into admin.

The best way, IMHO, to approach the new business issue is to invest wisely. Generating in high quality blog content, which is evergreen, will be the gift that keeps giving. It takes time to do the tasks necessary to get clients but, like anything else, there are ways to go about it that are better than others.

In the end some attorneys will always find ways to be inefficient and to waste time. Those are the ones who see their effective billing rate (the amount collected divided by the total of all hours worked) at the lowest.

2. JunkerVoland says:

Interesting article, but I would really interested in seeing some way that this information can inform young lawyers on setting those flat fees that everyone expects now-a-days.

• Sam Glover says:

Well for starters, it helps to know how much money you need to make in the time it takes you to perform the tasks for which you are charging flat fees. Time value isn’t the only factor in setting flat fees, of course, but it does establish the floor. You can’t charge less than the value of your time.

That said, it’s not particularly valuable to focus on your time when billing flat fees, which is why I’m working on some other calculators that will be more useful for lawyers who use alternative fee arrangements — or just want to focus on the big picture.

• flashwins says:

If you know everyone expects flat fees…. why disappoint with outdated hourly billing? I’m sure Sam will delete this comment for no reason again though.

• Sam Glover says:

Hourly billing is hardly outdated. Sometimes time is the best way to value a job, and sometimes it isn’t. When it is, you need to know what to charge.

As for deleting your comments, I see I did delete a number of comments of yours along the lines of “Great article!” We get many comments exactly like those from spambots, so I wasn’t sure whether your comments were genuine or not. Sorry for guessing wrong, but sometimes it’s hard to know.

In any case, thanks for reading and commenting, and I hope you’ll continue to do both!

• flashwins says:

Haha, totally reasonable. My apologies. The article about answering your own phone was gold, and I just wanted to let you know it was well received, at least on my end. As to your point, perhaps that’s true, but from a client perspective, I don’t want open ended billing. I understand there may be issues that develop during the course of representation but like most other services consumers pay for we should know what we are looking at, so if fixed rates are not feasible, most clients would like a fixed range.

3. Bryan Scheiderer says:

Sam, thanks for this, I have passed along the link. My only quibble might be the equal distribution to business admin, as a solo that might be factored a bit less, but you are absolutely correct to factor marketing equally, something I ignored for far too many years. Very good starting place, and for the comments about fixed fees, this is a good starting place to figure out *what* that fix fee should be. Thanks again

• Sam Glover says:

That’s fair. The right percentage will obviously depend on the practice, but I think a third is roughly right for most. I was going for a conservative estimate that would apply to the vast majority of lawyers. But I also provided the formula to make it easy for you to tweak the numbers on your own spreadsheet if you like.

Thanks for passing it along!

4. Cynthia Conlin says:

What a handy calculator! Thanks for sharing!

5. Lawyers are pricing themselves out of business.