Presentation: Calculating Client Profitability

November 11

I recommend profitability analysis as a tool routinely.  The principal benefit of profitability analysis is that it promotes accountability. A firm that understands the basic economics of their practice has the competitive advantage to make meaningful improvements.


This informative presentation will cover the following:
- The most reliable methods for computing client profitability
- The more common methods for allocating direct and indirect costs
- The various uses of client profitability data in compensation, client pricing, overhead control, recruiting and other significant functions of the firm.
-The pitfalls to avoid and methods to overcome partner fears about calculating client profitability for the first time.



Moving from Analysis to Action
The right technical training and correct understanding of strategic and political factors when communicating client profitability results is what moves analysis to action. Explaining results in the context of potential solutions that include a range of options for improvement will likely be more palatable to the originating partners. Engaged partners who understand the drivers of profitability in their practices become an incredibly powerful force for change.



Drilling Down

We are increasingly encouraged by the number of firms showing interest in computing client profitability. As this happens, the core competence of law firm partners will improve, and better decision-making will occur. Until that time, progressive partners and administrative personnel must continue to introduce these concepts into their firms. Learning to skillfully communicate results will increase the likelihood of adoption.



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