Why we've built an early warning system for law firm revenues
In legal services, visibility and predictability are everything. Clients want to know what their matters will cost—not just at the outset but as they unfold. Multiple surveys and countless conversations confirm that fee surprises are one of the quickest ways to erode trust between law firms and their clients.
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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And the pressure is only increasing. According to the BigHand 2025 Law Firm Finance Report, 85% of firms report rising client demand for financial transparency, up from 76% last year. At the same time, 72% of firms experienced increased write-offs in the past year, with 75% expecting further increase in write-offs in the year ahead. These figures paint a clear picture: law firms that fail to stay ahead of cost overruns will not only face commercial challenges but also risk damaging client relationships.
Meanwhile, the financial pressure on law firms is intensifying. Between 2022 and 2024, law firm fee earner salaries have grown three times faster than charge-out rates (according to RollOnFriday, PwC, and Ayora analysis). This imbalance puts the traditional profitability model at risk—especially when write-offs are rising and firms struggle to recover the full value of their work.
The problem of runaway WIP
One of the biggest culprits behind write-offs is what some call "runaway WIP" - when work suddenly accelerates, and the budget gets blown before anyone realises. This often happens at the worst possible time: when lawyers are at their busiest, dealing with the most intense phases of a matter. Tracking fees in the moment is difficult, if not impossible, because attention is understandably focused on the legal work itself.
The data problem
In an ideal world, technology would provide an early warning system—spotting the signals of runaway WIP before it becomes a crisis. The obvious way to do this, at least in theory, is to track time against workstreams or phases and project future costs based on structured data. But in practice, this approach runs into a fundamental problem: poor data quality.
Law firms, by and large, don’t have the granular data needed for such an approach to work reliably. Lawyers don’t always code their time entries consistently, and historical datasets of properly classified time are scarce. Budgets, where they are encoded, often aren’t broken down to the level needed for meaningful phase-based tracking.
This means that many traditional forecasting methods simply don’t work in the legal world. A system that relies on perfect data will struggle in an environment where the data is anything but perfect. That’s why we’ve taken a different approach—one designed to function in the real-world conditions of a law firm, rather than in an idealised version of one.
A different way to predict fee risk
Instead of relying on structured time tracking, we’ve built a system that can make sense of the raw, unstructured data in legal timesheets. Our run rate prediction model uses machine learning techniques to extract insights from incomplete and sometimes messy information.
At its core, the model processes time-sequenced data, learning from patterns in how legal matters develop over time in time datasets. Rather than producing a single fixed estimate, it takes a distributional approach—recognising uncertainty and adjusting dynamically as new data comes in. This allows it to flag potential budget risks early, even when the available information is imperfect.
The goal isn’t just to track spending but to provide a forward-looking view—helping lawyers and commercial finance teams catch fee overruns before they become a problem. In doing so, it creates a much-needed early warning system, giving law firms the chance to have proactive conversations with clients rather than reactive ones.
Bridging the gap between client service and financial oversight
At its best, technology should help bridge the gap between financial oversight and the reality of legal practice. Lawyers shouldn’t have to spend their time manually monitoring budgets, just as commercial finance teams shouldn’t have to chase lawyers for updates to figure out where a matter stands.
By making sense of messy data and providing real-time predictions, our system aims to reduce friction on both sides—giving firms a clearer, more accurate view of fee risk without adding to lawyers' workloads. Ultimately, it's about improving transparency, strengthening client relationships, and ensuring that clients aren’t left in the dark about costs.
With client expectations rising, write-offs increasing, and the profitability model under strain, law firms can no longer afford to take a reactive approach to cost management. Legal work will always have its uncertainties. But with the right tools, firms can at least ensure that when things do start to go off course, they know about it early enough to do something about it.