The lawyer’s role in profitability management
Profitability is often seen as a matter for finance teams, but senior lawyers have a pivotal role to play in managing and improving their firm’s financial performance. By recognising how their work intersects with profitability—and taking proactive steps to manage it—lawyers can not only strengthen client relationships but also drive better business outcomes.
Building the right tech stack is key
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How to choose the right tech stack for your company?
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What to consider when choosing the right tech stack?
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What are the most relevant factors to consider?
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What tech stack do we use at Simpletech?
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This blog explores how lawyers, especially senior practitioners, can contribute to profitability management by embracing their roles as relationship managers, effective staffers, and collaborators with internal business teams.
Lawyers as relationship managers
A key part of profitability management lies in managing client relationships effectively. For senior lawyers, this means going beyond delivering technical excellence and taking a more strategic approach. By raising potential challenges early and being proactive about key financial discussions, lawyers can avoid costly misunderstandings and ensure their work remains within profitable parameters.
- Intervening when work is going out of scope
Scope creep is a silent profitability killer. It often begins innocently—a client’s request for additional work here, a shift in focus there—but can quickly spiral into significant unbilled time. Senior lawyers must develop the ability to identify when matters are drifting beyond their agreed scope and intervene early. This may mean initiating discussions with clients to clarify expectations, adjusting deliverables, or agreeing on additional fees for the added work. - Renegotiating financial constraints
Budgets, fee caps, and phased billing arrangements are increasingly common in client engagements. While these structures provide predictability for clients, they can also strain profitability if not managed carefully. Lawyers should feel empowered to renegotiate these constraints when necessary. For example, if an initial budget proves unrealistic due to unforeseen complexities, discussing adjustments sooner rather than later can preserve profitability and strengthen client trust.
Being upfront about such matters isn’t just good financial sense; it’s also good relationship management. Most clients appreciate transparency and value the lawyer’s willingness to have difficult conversations rather than letting issues fester.
Lawyers as staffers
Beyond managing client relationships, senior lawyers play a critical role in staffing matters effectively. Decisions around who does what work—and how that work aligns with profitability goals—are far from incidental.
- Matching tasks to the minimum viable experience level
An important principle in profitability management is ensuring that tasks are matched to the minimum viable level of experience or grade. Senior lawyers should avoid overloading junior associates with complex tasks they aren’t equipped to handle, which can lead to inefficiencies and errors. Similarly, high-level partners spending too much time on tasks that could be delegated to junior lawyers or support staff can unnecessarily inflate costs. Thoughtful task allocation can strike the right balance, keeping clients happy while maintaining profitability. - Respecting client’s outside counsel guidelines
Most large clients now issue outside counsel guidelines that dictate everything from billing practices to team composition. Ignoring these guidelines can result in write-offs, disputes, or even the loss of a client. Senior lawyers should take the lead in ensuring these rules are understood and followed by their teams. - Monitoring time spent on tasks
Profitability isn’t just about doing the right tasks; it’s also about doing them efficiently. Senior lawyers should pay attention to whether certain tasks are taking longer than expected and intervene if necessary. This might mean identifying where training or additional support is needed or reassessing the scope of work.
By ensuring that the right people are doing the right work, in compliance with client expectations, senior lawyers can directly influence profitability while also enhancing team effectiveness.
Lawyers and internal finance/business services teams
Profitability management is not a solo effort. Senior lawyers should see their firm’s finance and business services teams as allies. These teams have access to financial data, insights, and tools that can help lawyers make informed decisions about managing budgets, billing practices, and resource allocation.
Collaborating with internal teams can also help lawyers identify trends—such as recurring inefficiencies or unprofitable client arrangements—and address them strategically. For example, regular review meetings with the finance team can help ensure that financial risks are flagged early and that there is alignment on how to address them.
Rather than seeing financial management as a burden, senior lawyers can benefit from embracing it as part of their leadership role. Their collaboration with business services can be a powerful force for improving firm-wide profitability.
Leveraging modern matter commercial management software
In today’s legal landscape, technology plays a crucial role in profitability management. Modern matter commercial management software offers powerful tools to help lawyers stay on top of financial performance, enhance efficiency, and reduce the risks of scope creep.
- Proactive AI insights
Advanced software solutions use AI to analyse time datasets and provide proactive insights. These tools can flag potential inefficiencies, highlight patterns of scope creep, and suggest adjustments to keep matters within budget. With these real-time insights, lawyers can address issues before they escalate and make data-driven decisions to protect profitability. - Intuitive workflow management
Workflow management tools within modern software help streamline task allocation and monitor progress. They can ensure that the right tasks are assigned to the right team members, in line with client expectations and firm profitability goals. Automated reminders and progress trackers keep teams accountable and minimise delays.
By incorporating these technologies into their workflows, senior lawyers can save time, make smarter decisions, and ultimately enhance the financial health of their matters and their firms.
Conclusion
Profitability management isn’t just about spreadsheets and balance sheets. It’s about the decisions senior lawyers make every day—whether that’s intervening to address scope creep, staffing matters efficiently, or working hand-in-hand with internal teams.
By proactively managing these aspects of their work, lawyers can ensure they deliver value to clients without sacrificing their firm’s bottom line. And in doing so, they strengthen their reputation not only as trusted advisers but also as indispensable contributors to the firm’s success.