Let’s talk about something that makes many lawyers uncomfortable: money.
Not billing rates or retainer amounts. I’m talking about really understanding your firm’s finances. Most lawyers can tell you their billable rate but can’t tell you their actual profit margin.
If someone asked you right now, “How profitable was last month?” could you answer without spending an hour digging through bank statements and spreadsheets?
If not, you’re not alone. But you are flying blind.
The Numbers That Actually Matter
Here’s what most law firm owners think they need to track:
- How much they billed
- How much they collected
- How much they spent
That’s not wrong, but it’s not enough.
Here’s what you really need to know:
- Which clients are actually profitable (not just which ones pay the most)
- Which practice areas make you the most money per hour
- What your real overhead costs are (including your time)
- Where your money actually goes each month
Your Homework (Grab a Calculator)
Let’s figure out your real hourly rate:
- Take your total revenue from last month
- Subtract all expenses (including what you paid yourself)
- Divide by the total hours you worked (not just billable hours)
That’s your real hourly rate. How does it compare to what you think you make?
The Wake-Up Call
We worked with a lawyer who thought he was doing great. He was billing $400/hour and staying busy.
When we actually looked at his numbers, he was making $73/hour for his actual time. He was working 70-hour weeks and making less than some of his employees.
The problem wasn’t his billing rate. The problem was that he had no idea where his time or money was actually going.
Making Money Make Sense
Here’s what changed everything for him (and can change everything for you):
Weekly Money Meetings — 15 minutes every Friday reviewing the key numbers Real-Time Dashboards — Knowing your finances daily, not monthly Profitability by Client — Seeing which clients are actually worth your time Expense Tracking — Every dollar categorized and accounted for
The Tools That Make It Simple
You don’t need to become an accountant. You just need systems that show you the truth.
Clio’s financial dashboards show you profitability in real-time. You can see which clients and practice areas are actually making you money, not just keeping you busy.
Ready to Make Real Money?
Being busy isn’t the same as being profitable. Working more hours isn’t the same as making more money.
What would change in your firm if you knew exactly which activities were actually making you money?
Want to see how profitable firms actually track their money? Check out Streamlined Legal Plus for financial systems that work. And use promo code CCC-STREAMLINED to sign up for Clio and get 3 months of Streamlined Legal Plus FREE! (That’s a $1,500 value!)
Recent Comments