Blog · Wallet share and penetration · Consulting and advisory
The honest answer to what realisation rate a law, accounting or consulting firm should have: the 85 to 95 percent figures quoted depend on which realisation is meant, billing realisation against recorded time or collection realisation against billed, on the rate card the time was valued at, and on the client and matter mix. This page gives the ranges by firm type, the three measurable things that set the right figure for one firm, and the table to compute before anyone quotes a percentage.
Realisation is what the firm gets over what it recorded, and there are two of them. This page sets them out, gives the ranges, and shows the three things that make one firm's figure mean something.
| Measure | Formula | Law, typical | Accounting, typical | Consulting, typical |
|---|---|---|---|---|
| Billing realisation | Fees billed ÷ time at standard rates | 82 to 92 percent | 80 to 90 percent | 75 to 90 percent |
| Collection realisation | Cash collected ÷ fees billed | 92 to 97 percent | 93 to 98 percent | 90 to 97 percent |
| Net realisation | Product of the two | 76 to 89 percent | 75 to 88 percent | 68 to 87 percent |
Consulting runs lower on billing realisation because more work is fixed-fee against time budgets that overrun.
| Stage | Amount | Rate vs prior stage |
|---|---|---|
| Time recorded at standard | $10,000,000 | |
| Fees billed | $8,800,000 | 88% billing realisation |
| Cash collected | $8,360,000 | 95% collection realisation |
| Net | 83.6% |
The firm quoting 95 is quoting collection. The firm quoting 88 is quoting billing. The partners feel 83.6.
| Year | Standard rate | Hours | Time at standard | Billed | Realisation |
|---|---|---|---|---|---|
| Last | $500 | 20,000 | $10,000,000 | $8,800,000 | 88% |
| This | $550 | 20,000 | $11,000,000 | $8,900,000 | 81% |
Billed rose one percent. Realisation fell seven points. The clients on agreed rates paid what they agreed; the rate card moved. At last year's card, this year's realisation is 89 percent, and the finding is that the rate rise was realised on almost nobody. Realised rate per hour, $440 to $445, is the figure that survives the card change.
| Client | Realisation, this year | Prior year | Three years ago | Write-offs this year | Decided? |
|---|---|---|---|---|---|
| A | 70% | 71% | 70% | $0 | Negotiated discount, on file |
| B | 74% | 85% | 92% | $180,000 | Nothing on file |
| C | 102% | 100% | 98% | $0 | Premium agreed |
B is the row. The realisation by client piece works the list, and the utilisation against realisation piece does the same per fee earner.
| Measure | Formula | From |
|---|---|---|
| Billing realisation | Billed ÷ time at standard, per client, matter, fee earner | Time and billing system |
| Collection realisation | Collected ÷ billed, per client | Billing and cash |
| Net realisation | Product | Above |
| Realised rate per hour | Billed ÷ hours | Time and billing |
| Same at prior rate card | Billed ÷ time at prior standard | Time, prior rates |
| Write-offs per client with a reason | Time recorded − time billed, by matter, with the write-off code | Billing system |
| Identity | Time at standard = billed + written off + written down + WIP still open | Time and billing |
Which realisation, unstated. Ninety-five reported; eighty-four received.
Rate rise read as realisation fall. Partners told to bill harder for a card change.
Firm average only. B's twenty-point slide inside an 88.
Write-offs without reasons. A discount that grew matter by matter and was never decided.
A good realisation rate is both realisations, computed at a fixed rate card, per client against the client's own history, with every write-off carrying a reason. Net realisation of 80 to 88 percent is normal range for most firms; the per-client trend and the realised rate per hour are what tell a firm whether its rate rises reached anyone. Covirage computes all of it from the time, billing and cash exports every month with the identity checked.
Both, and the product. Billing realisation is what partners give away before the bill goes out; collection realisation is what clients refuse or delay after. A firm at 90 and 95 realises 85.5 cents of every standard-rate dollar recorded. Each has a different owner: the first is the billing partner, the second is credit control and the engagement terms.
Because realisation is measured against standard rates and the standard rates went up. If clients on fixed fees or agreed discounts paid the same, realisation fell by exactly the rate increase. Measure at a fixed rate card across periods, or measure realised rate per hour in currency, and the fall disappears. A rate rise that is not realised is a finding; a rate rise that is masquerading as a realisation fall is not.
One that fell against its own history without a decision. A client at 70 percent that has been at 70 for five years has a negotiated discount; a client that was at 92 and is at 74 has had time written off matter by matter until the discount grew. The client-level trend, with the write-offs listed, is the table.