{"id":11466,"date":"2024-12-04T12:14:05","date_gmt":"2024-12-04T12:14:05","guid":{"rendered":"https:\/\/www.clio.com\/uk\/?p=11466"},"modified":"2024-12-04T12:14:16","modified_gmt":"2024-12-04T12:14:16","slug":"how-to-calculate-utilisation-rate","status":"publish","type":"post","link":"https:\/\/marketing.dev.clio.systems\/uk\/blog\/how-to-calculate-utilisation-rate\/","title":{"rendered":"How to Calculate Utilisation Rate and Why It&#8217;s Crucial"},"content":{"rendered":"<p><span style=\"font-weight: 400\">Understanding how to calculate utilisation rate is integral to running a successful law firm business. Law firms are also unique when compared to other businesses because hours are divided into billable versus non-billable. According to the <\/span><a title=\"Legal Trends Report\" href=\"https:\/\/marketing.dev.clio.systems\/uk\/resources\/legal-trends\/\" target=\"_blank\" rel=\"noopener\"><i><span style=\"font-weight: 400\">Legal Trends Report<\/span><\/i><\/a><span style=\"font-weight: 400\">, your firm\u2019s utilisation rate allows you to measure your firm\u2019s workload and productivity. It\u2019s one of the most <\/span><a title=\"Blog - 62 Law Firm KPIs You Should Measure\" href=\"https:\/\/marketing.dev.clio.systems\/uk\/blog\/law-firm-kpis\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">important KPIs law firms should track<\/span><\/a><span style=\"font-weight: 400\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">Read on to learn how to calculate and increase your firm\u2019s utilisation rate and how to use that information to help your law firm succeed.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\"><div class=\"o-featured-snippet o-theme--bone is-faq-snippet-question\">\n\t<div class=\"c-featured-snippet__inner\">\n\t\t<h3>\n\t\t\t<span>\n\t\t\t\tHow to calculate utilisation rate?\n\t\t\t<\/span>\n\t\t<\/h3>\n\t\t<div class=\"c-featured-snippet__content\">\n\t\t\t<p>The utilisation rate is calculated as the percentage of an employee's total working hours that are spent productively, specifically the hours billable to a client. Essentially, the utilisation rate quantifies the proportion of an employee's total working hours dedicated to productive tasks for clients.<\/p>\n\t\t<\/div>\n\t<\/div>\n<\/div>\n<\/span><\/p>\n<h2><span style=\"font-weight: 400\">Why are utilisation rates important for law firms?<\/span><\/h2>\n<p><span style=\"font-weight: 400\">Knowing how to calculate utilisation rates is critical for law firms. When you know how to calculate utilisation rate for your law firm, that knowledge can provide insight into your firm\u2019s billing efficiency. While knowing how to calculate utilisation rate is important, you should also keep in mind these other key law firm KPIs:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><b>Utilisation rate:<\/b><span style=\"font-weight: 400\"> As stated above, the utilisation rate measures workload and productivity. You can calculate the utilisation rate by dividing <\/span><a title=\"Blog - How to Track Time with a Billable Hours Chart\" href=\"https:\/\/marketing.dev.clio.systems\/uk\/blog\/billable-hours-chart\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">billable hours<\/span><\/a><span style=\"font-weight: 400\"> worked by the number of hours worked in a day.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><b>Realisation rate: <\/b><span style=\"font-weight: 400\">This measures the potential value of work performed. You can determine your law firm\u2019s realisation rate by dividing the number of billable hours invoiced by the number of hours worked.\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><b>Collection rate: <\/b><span style=\"font-weight: 400\">This rate measures the ability to capitalise on work performed. You can determine this by dividing the number of hours collected by the number of hours invoiced.\u00a0<\/span><\/li>\n<\/ul>\n<div class=\"o-featured-snippet o-theme--bone is-faq-snippet-question\">\n\t<div class=\"c-featured-snippet__inner\">\n\t\t<h3>\n\t\t\t<span>\n\t\t\t\tWhat is the formula for calculating utilisation rate?\n\t\t\t<\/span>\n\t\t<\/h3>\n\t\t<div class=\"c-featured-snippet__content\">\n\t\t\t<p>The formula for calculating your law firm\u2019s utilisation rate is to divide the number of billable hours worked by the number of worked hours in a day. For example, if your law firm has a 31% utilisation rate, your firm secured 2.5 billable hours in an eight-hour working day.<\/p>\n\t\t<\/div>\n\t<\/div>\n<\/div>\n\n<h2><span style=\"font-weight: 400\">How to calculate utilisation rate <\/span><\/h2>\n<p><span style=\"font-weight: 400\">We know you can calculate your firm\u2019s utilisation rate by dividing the number of billable hours worked by the number of total hours worked. Let\u2019s take a look at some examples using this formula:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Catherine worked 60 hours last week. Out of those hours, 20 were billable. If we divide 20 by 60 and then multiply by 100, we get 33.33. Therefore, Catherine&#8217;s utilisation rate for that one week is 33.33%.\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Avery had a 12-hour workday. They billed five of those hours to clients. Using the same equation above, we can determine Avery&#8217;s utilisation rate for the day\u201441.67%.\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">It&#8217;s important to remember that your (or your law firm\u2019s) utilisation rate doesn&#8217;t determine a solicitor&#8217;s value. KPIs are metrics we can use to quantify certain operations to improve your firm\u2019s success. Lawyers are humans helping other humans, and numbers only tell us part of that story. A revenue-related KPI won&#8217;t quantify client happiness or help you determine if you\u2019re providing a <\/span><a title=\"Blog - What Does it Mean to Run a Client-Centered Law Firm?\" href=\"https:\/\/marketing.dev.clio.systems\/blog\/client-centered-law-firm\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">client-centred experience<\/span><\/a><span style=\"font-weight: 400\">. KPIs are one of the tools you should use when evaluating the operations of your firm.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400\">How can you use utilisation rates for your law firm?<\/span><\/h2>\n<p><span style=\"font-weight: 400\">Calculating utilisation rates gives lawyers the important data and insights they need to make informed business decisions. For example, you can use utilisation rates to better understand the profitability potential for different legal services.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">Utilisation rates can also provide insight into resource allocation. For example, if a lawyer\u2019s utilisation rate is quite high, they might need more resources and support.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400\">What is the average utilisation rate for law firms?<\/span><\/h2>\n<p><span style=\"font-weight: 400\">According to the <em>2022 Legal Trends Report<\/em>, law firms saw a big jump in utilisation rates from 2021 to 2022\u2014from 31% to 33%. <\/span><\/p>\n<p><span style=\"font-weight: 400\">But the <\/span><a title=\"2020 Legal Trends Report\" href=\"https:\/\/marketing.dev.clio.systems\/uk\/guides\/legal-trends-report-2022\/\" target=\"_blank\" rel=\"noopener\"><i><span style=\"font-weight: 400\">2022 Legal Trends Report<\/span><\/i><\/a><span style=\"font-weight: 400\"> also shows that the average lawyer collects only \u00a3748 for every \u00a31,000 of billable work. This means that law firms could collect up to 34% more revenue by optimizing their realisation and collection rates. Keep in mind that average rates might vary based on practice area, geographical location, and how many years of experience a lawyer has. You can get a better sense of industry standards by reviewing average industry utilisation rates.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">According to the <\/span><a title=\"Learn more about the 2021 Legal Trends Report\" href=\"https:\/\/marketing.dev.clio.systems\/uk\/guides\/2021-legal-trends-report\/\" target=\"_blank\" rel=\"noopener\"><i><span style=\"font-weight: 400\">2021 Legal Trends Report<\/span><\/i><\/a><span style=\"font-weight: 400\">, on average, full-time lawyers work 49.6 hours each week. Of course, this number will vary and in this context, we\u2019re using it as a starting point for comparison. As for the number of billable hours lawyers work per year, this too will vary. Legal business consultants suggest that <\/span><a title=\"Blog - Best Practice: How many billable hours should an associate produce?\" href=\"https:\/\/www.isba.org\/barnews\/2015\/04\/22\/best-practice-how-many-billable-hours-should-associate-produce\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">1650 billable hours<\/span><\/a><span style=\"font-weight: 400\"> is a realistic goal for smaller firms. If we take 1650 billable hours and divide this by 50 weeks (assuming solicitors take two weeks of vacation), we get 33 billable hours per week. Now, we can divide this by the 49.6 figure mentioned above (average hours worked per week) and we get an average utilisation rate of 66%\u2014more than double the industry average in 2019.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">So, how can lawyers close the gap between 33% and 66%? Below we outline the process to increase your firm\u2019s utilisation rate.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400\">How to increase your law firm\u2019s utilisation rate<\/span><\/h2>\n<h3><span style=\"font-weight: 400\">Track your firm\u2019s utilisation rate<\/span><\/h3>\n<p><span style=\"font-weight: 400\">What gets measured, gets managed. Now that you know how to calculate utilisation rate, you need to determine what your firm\u2019s utilisation rate is. Then, set a <\/span><span style=\"font-weight: 400\">calendar reminder<\/span><span style=\"font-weight: 400\"> to record it regularly. This might be weekly, bi-weekly, or monthly depending on your goals.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400\">Have a clear, realistic goal\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400\">If your goal is to have a utilisation rate of 45% in January, record this and set your tracking notifications accordingly. Planning backwards from your benchmark goal enables you to be clear on what you\u2019re working towards and stay accountable.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400\">Track time<\/span><\/h3>\n<p><a title=\"Time and expense tracking software\" href=\"https:\/\/marketing.dev.clio.systems\/uk\/features\/legal-time-tracking\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Legal time recording<\/span><\/a><span style=\"font-weight: 400\"> and calculating <\/span><a title=\" Blog - 62 Law Firm KPIs You Should Measure\" href=\"https:\/\/marketing.dev.clio.systems\/uk\/blog\/law-firm-kpis\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">law firm KPIs<\/span><\/a><span style=\"font-weight: 400\"> go hand in hand. Tracking time doesn\u2019t have to be complicated or laborious. Once you understand how to track utilisation rates and the importance of it, it\u2019s evident why you should <\/span><span style=\"font-weight: 400\">prioritise time recording<\/span><span style=\"font-weight: 400\">.\u00a0<\/span><\/p>\n\n\t\n\t\t\t\n\t\t\t\t\n\t\t\n\t\t\t\t\t\t\t\t\t\n\t\t\n\t\t\t\t\n\t\t\n\t\t\t\t\t\t\t\n\t\t\t\t\t\t\n\t\t\n\t\t\t\t\t\t\t\n\t\t\n\t\t\t\t\n\t\t\t\t\t\n\n<div\n\tclass=\"o-image l-image aligncenter wp-image-11467 size-full  o-image__tall\"\n\t\tstyle=\"max-width: 30.6875rem;  width: 491px;\"\n\t\t>\n\t<div\n\t\tclass=\"o-image__wrap l-image__wrap js-lazy-image-wrapper\"\n\t\t\t\t\tstyle=\"padding-top:165.987780041%;\"\n\t\t\t>\n\t\t\t\t\t<noscript>\n\t\t\t\t<img\n\t\t\t\t\ttitle=\"How to calculate utilisation rate\"\n\t\t\t\t\talt=\"How&#x20;to&#x20;calculate&#x20;utilisation&#x20;rate&#x20;with&#x20;the&#x20;help&#x20;of&#x20;Clio&#x27;s&#x20;time&#x20;recording&#x20;software,&#x20;pictured&#x20;here&#x20;in&#x20;the&#x20;mobile&#x20;app\"\n\t\t\t\t\tsrc=\"https:\/\/marketing.dev.clio.systems\/uk\/wp-content\/uploads\/sites\/3\/2024\/05\/Screenshot-2024-05-28-at-15.12.16.png\"\n\t\t\t\t\twidth=\"491\"\n\t\t\t\t\theight=\"815\"\n\t\t\t\t\/>\n\t\t\t<\/noscript>\n\t\t\t\t<picture>\n\t\t\t\t\t\t<img\n\t\t\t\ttitle=\"How to calculate utilisation rate\"\n\t\t\t\talt=\"How&#x20;to&#x20;calculate&#x20;utilisation&#x20;rate&#x20;with&#x20;the&#x20;help&#x20;of&#x20;Clio&#x27;s&#x20;time&#x20;recording&#x20;software,&#x20;pictured&#x20;here&#x20;in&#x20;the&#x20;mobile&#x20;app\"\n\t\t\t\twidth=\"491\"\n\t\t\t\theight=\"815\"\n\n\t\t\t\t\t\t\t\t\tloading=\"lazy\"\n\t\t\t\t\tdata-src=\"https:\/\/marketing.dev.clio.systems\/uk\/wp-content\/uploads\/sites\/3\/2024\/05\/Screenshot-2024-05-28-at-15.12.16.png\"\n\t\t\t\t\tsrc=\"data:image\/gif;base64,R0lGODlhAQABAIAAAP\/\/\/wAAACH5BAEAAAAALAAAAAABAAEAAAICRAEAOw==\"\n\t\t\t\t\tclass=\"is-lazy js-lazy-image\"\n\t\t\t\t\n\t\t\t\t\t\t\t\/>\n\t\t<\/picture>\n\t<\/div>\n\t<\/div>\n\n\t\t\t\n\n<h3><span style=\"font-weight: 400\">Automate your law firm with cloud-based legal practice management software\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400\">It\u2019s never been easier to automate non-billable, administrative tasks. Automation simply means you can reduce the amount of time you spend on non-billable work. With automation, you can free up your time to take on more billable, <\/span><a title=\"The Client-Centered Law Firm: Get First Chapter Free\" href=\"https:\/\/marketing.dev.clio.systems\/resources\/client-centered-law-firm\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">client-centred<\/span><\/a><span style=\"font-weight: 400\"> work.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400\">Delegate and do less non-billable work<\/span><\/h3>\n<p><span style=\"font-weight: 400\">Delegation isn\u2019t easy, but it certainly is necessary. The high-growth and tech-centric accounting firm, Envolta, listed \u201clearning to delegate\u201d as one of the <\/span><a title=\"Learn more about Envolta\" href=\"https:\/\/envolta.ca\/blog\/5-hardest-things-youll-have-to-face-as-a-business-owner\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">five hardest things you\u2019ll have to face as a business owner<\/span><\/a><span style=\"font-weight: 400\">. Not even the best solicitors can do everything themselves. On the contrary, the best lawyers succeed largely thanks to their ability to delegate. With the right <\/span><a title=\"The law is complicated enough\u2014simplify managing your firm\" href=\"https:\/\/marketing.dev.clio.systems\/uk\/manage\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">legal practice management software<\/span><\/a><span style=\"font-weight: 400\">, <\/span><span style=\"font-weight: 400\">assigning tasks<\/span><span style=\"font-weight: 400\"> (from a workflow perspective) is a lot easier.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400\">Optimise your law firm\u2019s workflows and processes<\/span><\/h3>\n<p><span style=\"font-weight: 400\">Streamlining processes from <\/span><a title=\"Client Intake Software\" href=\"https:\/\/marketing.dev.clio.systems\/uk\/features\/online-intake-forms\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">client intake<\/span><\/a><span style=\"font-weight: 400\"> to billing will have profound effects on your firm\u2019s workflow. Moreover, optimisation should enable you to take on more billable hours, therefore supporting your utilisation rate goals.<\/span><\/p>\n<p><span style=\"font-weight: 400\">As for law firm collections, how do you optimise the process for your firm? Using modern and flexible payment solutions can help you streamline the payment process and <\/span><span style=\"font-weight: 400\">get paid faster<\/span><span style=\"font-weight: 400\">.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Learn more about how you can improve your collection rates, streamline your payment process, and <\/span><a title=\"Learn more about Clio Payments\" href=\"https:\/\/marketing.dev.clio.systems\/uk\/features\/payments\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">make it easy for your clients to pay with Clio Payments<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/p>\n<h2><span style=\"font-weight: 400\">Your utilisation rate is one of the keys to your law firm\u2019s success<\/span><\/h2>\n<p><span style=\"font-weight: 400\">By <\/span><a title=\"Legal Timekeeping and Expense Tracking Software\" href=\"https:\/\/marketing.dev.clio.systems\/uk\/features\/legal-time-tracking\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">accurately recording your time<\/span><\/a><span style=\"font-weight: 400\">, you can be confident when calculating your firm\u2019s utilisation rate. The more you track your efforts, the easier it will be to identify challenges, solutions, and improvements.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">Using an <\/span><a title=\"The law is complicated enough\u2014simplify managing your firm\" href=\"https:\/\/marketing.dev.clio.systems\/uk\/manage\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">all-in-one practice management software<\/span><\/a><span style=\"font-weight: 400\"> with time tracking and <\/span><a title=\"Clio Reports\" href=\"https:\/\/help.clio.com\/hc\/en-150\/articles\/9290091783323-Clio-Manage-Detailed-Annual-Report\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">reporting<\/span><\/a><span style=\"font-weight: 400\"> capabilities will help you measure your utilisation rate. And ultimately, work towards tracking progress and growing this number, all while prioritizing the <\/span><a title=\"The Client-Centered Law Firm: Get First Chapter Free\" href=\"https:\/\/marketing.dev.clio.systems\/resources\/client-centered-law-firm\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">client-centred experience<\/span><\/a><span style=\"font-weight: 400\">.\u00a0<\/span><\/p>\n<p class=\"p1\">\n<div class=\"o-form--marketo l-form--marketo js-marketo-form  \"\n\tdata-form-id=\"5186\"\n\tdata-form-ids=''\n\tdata-is-kiosk-mode=\"\"\n\tdata-is-multi-step-form=\"\"\n\tdata-is-debug-mode=\"\"\n\tdata-cookie=\"\"\n\tdata-next-form-id=\"\"\n\tdata-zoom-info-form-complete=\"\"\n\tdata-followup-url=\"https:\/\/marketing.dev.clio.systems\/wp-content\/uploads\/2023\/11\/Guide-Improving-Payment-Collections-in-Your-Law-Firm.pdf\"\n\tdata-followup-url-target=\"\"\n\tdata-followup-cta=\"\"\n\tdata-thank-you-message=\"\"\n\tdata-submit-button-text=\"Download &amp; Fill\"\n\t\n\t\n\t\n>\n\t\t<div class=\"js-marketo-form-anchor\"><\/div>\n\t<div class=\"o-form__wrap l-form__wrap is-just-form\">\n\t\t<div class=\"o-form__loader js-form-loader\">Loading ...<\/div>\n\t\t<div class=\"js-form-container is-hidden\">\n\t\t\t<h2 class=\"o-form__title\">Read our Guide: How to Improve Payment Collections in Your Law Firm<\/h2>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n<\/div>\n<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Find out how to calculate your firm&#8217;s utilisation rate and understand its importance in for firm cash flow and efficiency in this blog.<\/p>\n","protected":false},"author":178,"featured_media":11468,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[12],"tags":[],"coauthors":[46],"class_list":["post-11466","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","content_category-firm-performance","content_category-productivity-and-utilisation","content_category-productivity-technology"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.7 (Yoast SEO v24.7) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How to Calculate Utilisation Rate and Why It&#039;s Crucial | Clio UK<\/title>\n<meta name=\"description\" content=\"Find out how to calculate your firm&#039;s utilisation rate and understand its importance in for firm cash flow and efficiency in this blog.\" \/>\n<meta name=\"robots\" content=\"index, follow, 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