Is Your Firm a Disciplined Law Firm?

June 5

Nofile-3498626462p-1w at the midpoint of the year, how are things going?  Well, I hope.


At this point, it may be difficult to determine how successful the year will be for the firm. While success may be defined in a number of ways, most everyone’s definition includes: 

- their personal income,

- the overall size of the profit pool and

- if there was enough money to compensate the firm’s key people fairly.


Normally, this is about as far as it goes. This is understandable since most successful lawyers are extremely busy with client work and simply do not have the time to focus on administrative matters. Busy lawyers count on their managing partners and administrators to maximize returns and keep the firm healthy.


Oftentimes, however, the firm’s busiest lawyers are disappointed at year end and get caught off guard by poor result or an unmet expectation. Sometimes they don’t know if they did well or not. It is to these lawyers I address this post. Specifically, how does a lawyer know if he or she is practicing in a disciplined firm?


The attributes of a disciplined law firm are as follows:

  • There is a culture of efficiency. It is not ridiculously hard to spend money, but it is not the easy either;
  • The firm is not overstaffed;
  • There is a culture of keeping business and personal expenses separate;
  • Poor performers are dealt with even if they are well liked and firm profits are good;
  • It is easy to find out the expected overhead per lawyer for the coming year and what it was the year before;
  • Cost per hour data should be easily obtainable;
  • Every partner has access to lawyer and client profitability data;
  • Compensation is mostly objective, with few exceptions as to application;
  • Monthly draws are reasonable, and debt is low;
  • Capital accounts are positive, and there is cash in the bank;
  • Ongoing profit margins are acceptable (different in every firm depending upon practice mix);
  • The average partner is able to read a simple income statement and balance sheet; and
  • Financial questions are answered quickly and competently.


If a busy lawyer can pay attention to these few fundamentals, the chances of being surprised at year end are minimal. Practicing in a firm that is undisciplined will be evidenced by inconsistent decision making and poor performance. Partners who work hard for their clients, bill and collect their fees and effectively market deserve to be fairly rewarded.





- Law  Firm Client Profitability That Everyone Can Understand


- Aligning Equity with Contributed Profits


- Using Data to Determine Compensation