A worrisome idea: a bonus scheme for associates who exceed a quarterly threshold of billable hours

A consulting firm I know rewards its mid-level consultants quarterly if their utilization rates exceed a certain figure. It does so by giving them at the end of each quarter the percentage of their salary that is the same as the percentage they exceeded the utilization goal.

If a law firm did the same, general counsel should be perturbed. If the firm said to its associates “We expect you to bill 1800 hours, which is 450 hours a quarter. For every percentage that your billable hours in a quarter exceed 450, we will write you a check for that percentage of your base. If your base is $100,000 – $25,000 a quarter – and you bill 495 hours in a quarter (10% more than the bogey), you will get a check for $2,500 (10% of your base).”

I believe that any law firm that institutes such a program should inform all its clients about it, and that those clients should worry.

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