September/October 2019

Editor's Note

Understanding Law Firm Revenues and Expenses

Mary Vandenack

I co-founded a law firm in 2005 for many reasons. Two significant ones were that I struggled with the lack of technology being employed by the law firms where I had worked as well as with the limitations created by billable hour structures. I set out to create a firm that used technology, offered alternative fees and compensated lawyers on true teamwork and client service rather than the lip-service versions I’d encountered.

Despite my strong background in technology, accounting and finance—and a firm co-founder who was equally skilled—the path to being serious about automation and alternative fees has been a constant challenge. To achieve a structure other than the traditional law firm business model, or simply creating an alternative fee structure within a traditional law firm, requires one to understand, to evaluate and to re-evaluate all aspects of a law firm and law firm finances.

The most important financial issue for any firm is to have revenue. When my co-founder and I started our firm, what mattered most was that there was revenue. We didn’t care where it came from, and we didn’t get too focused initially on our realization rate. We simply focused on finding work, getting it done and getting compensated for it. We were fortunate to have significant work from the day we opened.

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