Attorney Hourly Rate Calculator
$
Your personal take-home pay target before personal taxes.
$
Rent, staff, insurance, software, marketing, bar dues.
Accounting for vacation, holidays, and sick time.
Hours actually billed to clients (excluding admin/CLE).
%
Percentage of billed invoices you actually collect.
Total Annual Revenue Needed:
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Total Billable Hours/Year:
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Break-Even Rate (Expenses Only):
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Recommended Hourly Rate:
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How to Determine Your Attorney Hourly Rate
Setting the correct hourly rate is one of the most critical decisions for a solo practitioner or small law firm. A rate that is too low leaves money on the table and may undervalue your expertise, while a rate that is too high may deter potential clients. This calculator utilizes the "Reverse Engineering" method, starting with your financial goals and working backward to find the necessary billing rate.
The "Target Income" Formula
Rather than guessing based on what competitors charge, this calculator uses your specific financial needs. The logic follows these steps:
- Total Revenue Requirement: This is the sum of your desired personal income and your business overhead. Note that "Overhead" must include everything from office rent and paralegal salaries to malpractice insurance and continuing legal education (CLE) costs.
- The Realization Gap: Very few attorneys collect 100% of what they bill. Clients may dispute charges, default on payments, or negotiate reductions. By factoring in a "Collection Rate" (industry average is often between 85-95%), the calculator adjusts your required gross revenue upward to ensure you still net your target income after write-offs.
- Billable vs. Workable Hours: An attorney might work 50 hours a week, but only 30 of those may be billable. The rest is consumed by administrative tasks, business development, and case management that cannot be billed to a client. Your rate must be high enough on the billable hours to subsidize the non-billable hours.
Calculating Overhead for Law Firms
To get an accurate result, ensure you have summed up all annual business expenses, including:
- Facilities: Rent, utilities, cleaning services.
- Technology: Practice management software (Clio, MyCase), legal research (Westlaw, LexisNexis), and computer hardware.
- Personnel: Salaries, payroll taxes, and benefits for support staff.
- Professional Fees: Bar association dues, licensing fees, and malpractice insurance premiums.
- Marketing: Website hosting, SEO, and networking event costs.
Example Calculation
Consider an attorney who wants to take home $175,000 per year. Their annual overhead is $80,000. They plan to work 48 weeks a year and realistically bill 28 hours per week. They have a collection rate of 92%.
1. Net Needs: $175,000 + $80,000 = $255,000 cash needed.
2. Gross Billing Requirement: $255,000 / 0.92 = $277,174 (Amount to bill to collect the cash needed).
3. Total Billable Hours: 48 weeks × 28 hours = 1,344 hours.
4. Hourly Rate: $277,174 / 1,344 hours ≈ $206 per hour.
This figure represents the minimum rate required to meet financial goals. Market conditions, practice area complexity, and years of experience should also inform the final rate you publish.