Chargeable hours are killing your ability to cross-sell – here’s why

Anyone who knows me, or has read my posts on LinkedIn, knows how much I despise chargeable hours.

Having practised law for a number of years, I saw, and continue to see, first hand the damage it does from top to bottom in a law firm.

I could write about the waste it creates – that write-offs in the profession average around 15-20% each year.

Or the stress and poor mental health caused by the unrealistic expectations set trying to reach 1,700+ chargeable hours each year, all the while trying to build and maintain client relationships, undertaking essential non-chargeable work. And remembering to eat to live.

Or the impact on home life – studies have revealed that around 25% of married lawyers end up getting divorced.

Or that those unrealistic expectations lead almost universally to inflating chargeable time on matters, in the knowledge that you can later write off, well, 15-20% of that time anyway. An anonymous poll in Roll on Friday in 2024 revealed that 35% of lawyers have padded their timesheets, with 13% admitting to doing it regularly.

Chargeable time disproportionately impacts mothers returning to work after maternity leave, many of whom will be working reduced hours, so producing fewer chargeable hours and therefore not keeping up with their male counterparts when it comes to yearly reviews and promotions.

And it’s not just the impact it has on lawyers and the way they work. Think about it from a strategic level. If you are a partner or director of a law firm, one of your responsibilities is to ensure that your teams are meeting their chargeable hours each month and year; to trawl through endless amounts of data to find out who isn’t keeping up and who’s writing off too much time; then have meetings with team leaders to berate them and pass down the message that chargeable time is what keeps the lights on.

Was that your dream when you made it to the top of the tree? Was that the impact you were hoping to make?

Now, these problems would be more than enough on their own. But, in addition to these, it’s also stopping you and your colleagues from cross-selling – a key component in growing your business.

Selling to an existing client is 6-7 times cheaper than acquiring a new one, and the success rate of selling

These stats lay bare the importance of cross-selling to law firms. Why put most of your effort into hunting for new clients when your easiest wins are already in your database – clients who know you and have worked with you before?

And if, deep down, we know (which most of us do), why don’t we cross-sell more?

The answer is very simple: chargeable time. Lawyers are expected to bill between 1,400 and 2,000+ chargeable hours each year and that is the metric by which they are judged, rewarded or penalised.

If that’s the case, why would you spend any of your precious non-chargeable BD time winning work for someone else? If it’s not taken into account at your yearly review, you’re not going to help a colleague reach their chargeable hours target at your own expense.

“So, you’ve not hit your chargeable hours target for this year.”

“Yes, but I brought in 3 new clients: two for Corporate and 1 for the Retail sector that has produced work the Employment and Commercial teams – those fees combined have reached over £300,000. Add that to my own chargeable work and I’m way over my target.”

“I can see that, but you haven’t hit your chargeable hours, which has impacted our team’s figures.”

That is a conversation that happens time and time again: yes, you’ve brought in new clients, but they’ve boosted another team’s figures, while ours haven’t reached their target.

Overall, the law firm benefits from cross-selling, but the individual practice areas don’t, which means firms live within silos – each practice area focused solely on bringing in work for themselves.

Which creates the biggest problem of all: poor client service. You have a client who would benefit greatly from working with your firm across different practice areas, but you don’t take the time to get to know them beyond the work they come to you for, so they have to search for other law firms to do the rest of the work.

Imagine how the client would feel if they found out you could have saved them time and expense by putting them in touch with one of your colleagues? And imagine how you’d feel if you found out that a client who works with another practice area was involved in a transaction and used a different firm because they had no idea you existed?

And you run the risk of losing that client altogether. There are lawyers out there who cross-sell, who make sure their clients don’t need to look elsewhere for legal advice. And when they come to your client and find out that they can support all their legal needs, that client will make the move over to your competitor.

So why is chargeable time still so dominant in the legal profession? Why do we continue to use it when there are better alternatives? Well, that’s an article for another time.

For now, know this: If you build a culture of cross-selling throughout your firm, then every lawyer benefits from work being passed around the entire firm, which means the firm benefits from increased fees.

And most importantly, your clients benefit from better service provided by lawyers who care about all their legal needs, not just their own chargeable hours targets. And those clients will see you as a trusted advisor – that strategic partner they know they can turn to help them get better outcomes.

Whether chargeable time is the cause or just a symptom of a bigger problem is up for debate, but what can’t be denied is that clients lose out because of it.

And it’s up to the legal profession to do something about it.