The realization rate is the proportion of billable hours at standard billing rates to the amount that is actually billed to clients. For example, an attorney's standard rate is $300/hour, and she works 140 billable hours in a month. Thus, her monthly billing at her standard rate is $42,000. However, the partner only bills $40,000, which is a realization rate of 95.2% (calculated as $40,000 billed divided by $42,000 at standard rates).
- Junior employees tend to be less efficient, so fewer of their hours are billed.
- Clients impose pressure to keep total billings low.
- There is a misunderstanding regarding the scope of the work to be performed.
Realization rates can be reported by individual, partner, office, or practice group.