Mastering Your Law Firm's Economics: A Strategic Guide

Law firms that understand their economics are more likely to capture and maintain an edge in today's highly competitive legal market.  

A law firm’s economic model defines how the firm runs from an economic perspective and allows a firm to:  

• generate fees
• reward origination 
• manage overhead
• invest earnings, and
• define the threshold profit levels.

When a law firm understands its economics, it knows what drives its practice, profitability, and success. It is also in a better position to:  

• adapt to unforeseen changes 
• work more efficiently
• respond to client demands
• retain best attorneys

Law firms that can operate within a defined economic model have a sustainable competitive advantage.

Building an economic model is as much a strategic exercise as it is a financial one. Both disciplines must have input into the process. No financial model ever implemented itself, and plenty of strategic plans have failed due to insufficient profitability

A good process, the right modeling tools, and experienced support can reduce the frustration and fatigue of creating a financially and strategically sound economic model.  Our latest eBook can help. 

Download our eBook "Building a Law Firm Economic Model" (pdf) to guide your law firm through the following: 

• What is an economic model, and why is it important to your law firm? 
• The essential components of building an effective economic model
• Additional resources include an editable One-Page Economic Model (pdf)

The eBook reviews the most significant components to consider when developing an economic model for your law firm, including Revenue, Working Attorney Compensation, Origination Compensation, Overhead, Strategic Initiatives, and Threshold Profit.

Another powerful resource for your law firm is the editable Economic Model Template. The template considers production, payroll, overhead, and profit per group.  Download your own template to use for your law firm. The template is editable to be customized for your law firm. 

It is important to first understand where your firm fits into the market and then build a model to optimize performance in these parameters.