March 19, 2005
What is realization?
Unless stated otherwise, Realization means what percent of billable work actually gets collected after write-offs, adjustments and bad debts. Sometimes this measurement is referred to as “overall realization”. The reported mean average for all law firms is around 90%.
As a firm's financial management becomes more sophisticated, “overall realization” is often separated into its components, for example “Billing Realization” and “Collection Realization”. Law firm management may go further and begin to track such issues as percent of billed hours at standard rates realized when compared to those same hours at negotiated rates. But, I repeat, unless stated otherwise, Realization refers to the percent of billable work that actually gets collected after write-off, adjustments and bad debts.
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Filed under Law Firm Bus Model by Tom Collins