Law Firms Are Collecting More — But Keeping Less: Where Profitability Slips Through the Cracks
Your firm might be collecting more than ever — but that doesn’t mean you're making more.
According to industry data, law firm revenue per lawyer is up, but profit margins are flat or declining. So where’s the money going?
Spoiler: It’s not just inflation. It’s operational leaks.
Here are the hidden places profitability slips through the cracks — and what you can do to seal them.
1. Time Capture Is Incomplete or Inaccurate
Missed time entries, delayed entries, or inconsistent tracking methods = revenue left on the table.
If you're not capturing work the day it's done, you’re already losing money.
2. Realization and Collection Rates Are Slipping
You can bill $1M — but if you only realize 80% and collect 85% of that, you’re only banking $680K.
Low realization is usually a sign of:
Over-discounting
Billing inefficiencies
Poor communication with clients about scope/value
3. Overhiring Without Process
Firms often hire more staff to solve pain points that are actually process problems.
More people doesn’t mean more efficiency — it means more salaries, more management, and more overhead.
If your systems aren’t clear, new hires just inherit the chaos.
4. Write-Offs Become Routine
When billing gets delayed or clients push back, firms often default to “just write it down.”
That may keep clients happy short-term, but it creates long-term profitability issues.
5. Leadership Isn’t Watching the Right Metrics
Many partners look at revenue and bank balance — but ignore:
Realization rate
Average matter profitability
Utilization
Staff efficiency
Without real-time KPIs and visibility into operations, it’s hard to course-correct.
How a Fractional COO Can Help
A fractional COO brings:
Visibility into firm-wide financials and KPIs
Profit-focused process improvements
Staffing and role alignment
Billing and timekeeping accountability systems
In short: they fix the root causes — not just the symptoms.
If your revenue is growing but profits aren’t, let’s fix that. Schedule a consultation with ING Collaborations and get your margin back.