Professional services
Law Practice Realization Rate Calculator
Measures realisation, the gap between time recorded and fees billed.
Result
Business arithmetic for running a practice, not legal advice. Fee agreements, contingency limits, trust accounting and advertising are all governed by the rules of professional conduct where you practise, and several are strict. Check the applicable rules before any of this affects a client agreement or a marketing decision. Write-downs are usually a scoping problem rather than an efficiency one. Work the client did not agree to and would not pay for gets written off at billing, and the fix is at the engagement letter rather than at the invoice.
Get a Free Business AuditHow the calculation works
Amounts billed divided by the standard value of time recorded, with the written-down value shown. Realisation captures discounts, courtesy reductions, flat fees that ran over the hours assumed, and time simply not billed. Chained with collection it gives the share of recorded value that becomes cash, which is the figure a practice should actually price against.
What moves the number
- Write-downs for work the client did not expect.
- Flat fee matters that consumed more hours than priced.
- Discounts given at billing rather than agreed up front.
- Supervision and internal time recorded against matters.
Where this one goes wrong
Most write-downs are decided at the billing stage by someone reluctant to send a bill the client will argue with, which means the real cause sits earlier: scope that grew without a conversation, or a fee quoted before the work was understood. Fixing realisation means fixing the engagement and the communication, not the billing decision. Flat fee work deserves separate tracking, because its realisation is simply whether the hours came in at estimate, and a practice blending it with hourly work cannot see which flat fees lose money.
Before you quote
- Track the reason for each write-down, not just the amount.
- Measure flat fee matters separately from hourly ones.
- Agree scope changes before they reach the bill.
Questions
About this calculator
What actually causes write-downs?
Usually scope that grew without a conversation, or a fee quoted before the work was understood. The write-down is decided at billing by someone unwilling to send a disputed bill, but the cause sits at the engagement stage, which is where the fix belongs.
How does realisation differ from collection?
Realisation is billed against recorded value; collection is paid against billed. Multiplying them gives the share of recorded time that becomes cash, and that combined figure is what a practice should price against rather than the headline rate.
Should flat fee work be tracked separately?
Yes, because its realisation is purely whether the hours came in at estimate. Blending it with hourly work hides which flat fees lose money, and flat fee pricing only improves if you can see which matters consumed more time than they were priced for.
The formula
realization = amount invoiced / (hours recorded x standard rate)
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How to use this calculator
- Hours recorded per month. Enter your own figure; the page starts at 118.
- Hours invoiced. Enter your own figure; the page starts at 99.
- Standard rate ($). Enter your own figure; the page starts at $295.
- Amount invoiced ($). Enter your own figure; the page starts at $26,800.
- Write-downs from scope creep (%). As a share of all write-downs.
The result updates as you type, so you can try a figure, see what it does to overall realization, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Hours recorded per month | 118 |
| Hours invoiced | 99 |
| Standard rate | $295 |
| Amount invoiced | $26,800 |
| Write-downs from scope creep | 60% |
What comes out
| Result | Value |
|---|---|
| Overall realization main result | 76.99% |
| Written down per month | $8,010 |
| Written down per year | $96,120 |
| Attributable to scope creep | $57,672 |
| Effective rate per hour recorded | $227.12 |
Realization is 76.99%, writing down $8,010 a month and $96,120 a year. If 60 of that is scope creep, tightening engagement letters is worth $57,672 a year.
How sensitive the answer is
Holding everything else steady and changing only standard rate, this is what happens to overall realization. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Standard rate ($) | Overall realization |
|---|---|
| $148 | 153.46% |
| $221 | 102.77% |
| $295 example above | 76.99% |
| $443 | 51.27% |
| $590 | 38.49% |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Hours recorded per month
- A number, between 0 and 1000, starting at 118.
- Hours invoiced
- A number, between 0 and 1000, starting at 99.
- Standard rate ($)
- A money amount, starting at $295.
- Amount invoiced ($)
- A money amount, starting at $26,800.
- Write-downs from scope creep (%)
- As a share of all write-downs.
What the results tell you
| Result | What it is |
|---|---|
| Overall realization | The headline result. A percentage. |
| Written down per month | A money figure. |
| Written down per year | A money figure. |
| Attributable to scope creep | A money figure. |
| Effective rate per hour recorded | A money figure. |
Keep going
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