Perhaps the assumption of 1,850 chargeable hours a year per in-house lawyer is too high

The Client Advisory produced jointly by Hildebrandt International and Citi Private Bank, Jan. 2008 at 5, shows “average annual productivity” by four categories of law-firm lawyers. From a group of large US law firms that were described as “lower profit firms” (firms having Profit Per Equity Partner less than $500,000 in 2000), equity partners averaged 1,666 hours, non-equity partners averaged 1,603 hours; and associates averaged 1,770. In “higher profit firms” the averages were a few hours higher. Law firm lawyers strive to bill every hour they can, so it is unlikely that these figures understate average billable hours.

Many people in our industry presume the in-house lawyers in the United States put in the equivalent of 1,850 chargeable hours (See my post of Sept. 25, 2005: 1,850 as a normal assumption for in-house chargeable hours; and Jan. 3, 2008: calculates costs for senior lawyers.). Estimates in support of that figure raise doubts, since law-department lawyers may exaggerate their estimates of chargeable hours or hours worked (See my post of May 24, 2007: on average 50 hours a week among Canadian corporate counsel; Sept. 25, 2005: “generally 45-50 hours” worked per week; April 13, 2006: 52% on in-housers said 41-50 hours a week while 38% said 51-60 hours; and May 16, 2006: definition of “chargeable hour.”).

If the presumed standard is too high, if in fact the in-house load is closer to 1,600 chargeable hours a year, calculations of what an in-house attorney costs the employer rise, perhaps dramatically (See my post of July 25, 2007: calculations for highly-paid general counsel; Dec. 16, 2005: consequences of miscalculating fully-loaded costs of inside lawyers.). The difference can be significant (See my post of Nov. 20, 2006: Aviva’s law department reports an ideal of 1,320 chargeable hours a year.).

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