In an industry where every billable minute counts, profit leakage is a significant and very real concern. As profit leakages continually pose risks to their financial health, almost all firms have looked to raise the billable hours targets in 2023, while around half of UK firms had done so by more than 10%.
While this shows the need to raise additional revenue, fee-earners should continue to be supported by law firms in providing tools to not only maximise the number of billable hours possible, but also to ensure that those billable hours convert to the firm’s bottom line without profit leakage.
To do this, firms need to first understand the sources for profit leakage, before then deploying solutions that will help maximise efficiency and profit retention.
Profit leakage in law firms can arise from various sources such as poor or inadequate time recording practices, poorly managed finances, wasted resources and failure to charge clients for work carried out. Therefore, performing an audit to detect and assess each area of possible leakage should be an essential part of the management process.
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