Calculate your unbillable hours
Method: weekly hours = fee earners × unbillable hours each. Annual hours = weekly hours × working weeks. Annual value = annual hours × charge-out rate. The starting figures are placeholders to show how it works, not a claim about any firm: replace them with yours.
How does the calculation work?
It is deliberately simple arithmetic, because the value is in seeing the scale, not in false precision. The weekly figure is every fee earner's unbillable time added together. The annual figure spreads that across the weeks people are actually working. The value is what those hours would be worth if they were spent on billed work at your average rate.
Two judgement calls sit inside it. The first is the hours figure, which is always an estimate. The second is the charge-out rate: an average across fee earners understates the cost if most of the admin lands on senior people with higher rates, which it usually does. If that is true in your firm, run it again with the senior rate and the senior headcount on their own.
What should you do with the number?
Treat it as the size of the prize, not a forecast. The useful next question is where those hours go, because the total is spread across several jobs and only one should be rebuilt first. The audit splits the hours across the four places they usually go and names the job to start with. The guide to calculating unbillable hours explains how to gather better inputs if you want a firmer figure.