How to Improve Law Firm Profitability

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Law firm profitability is essential for effective business development and growth. The legal market and legal service industry have faced many difficulties in the past decade with recent law reforms, fixed costs, Brexit, and Covid-19. The oncoming recession and cost of living crisis is set to bring more financial hurdles to be faced by businesses of all shapes and sizes, including those in the legal industry.

When it comes to overcoming those financial hurdles, the bottom line is that effective law firm management and efficiency of legal operations is required for maximising your law practice profit margins. We have set out some advice on how to improve law firm profitability to help you stay on top of your cash flow.

Management of Your Legal Costs

All legal departments and legal professionals must deal with the issue of managing and settling legal costs at the end of each case, regardless of their practice area. Effective management of legal costs will help to limit your overheads and maximise net profits received through legal costs following the settlement of a claim. 

However, a mistake often made is that costs should only be considered on conclusion of a case. It is imperative that costs are considered from the outset of a case, ensuring the retainer is properly constructed, and success fee is calculated in a compliant manner with bespoke risk assessment, and setting appropriate rates for billable hours dependent upon the likely complexities/value of any claim/instruction.

Successful negotiation of legal costs, such as Solicitor’s hourly rates for those who work on billable matters will help to ensure that you are obtaining maximum profit from each case.

Using an experienced Costs Draftsman to assist you in drafting your Precedent HBill of Costs and Replies to Points of Dispute will significantly assist your firm in recovering the maximum amount of legal costs and disbursements.

They can also assist you through the process of Detailed Assessment. Hard work in conducting a case can however, be undone by failure to properly manage costs from the outset (such as setting appropriate hourly rates, or to adequately budget costs).

The unsuccessful conclusion of a case is an inevitability for all law firms. Following such an outcome, the losing party is required to pay the winning party’s legal costs.

Effective negotiation of the winning party’s Costs Budget and Bill of Costs will significantly assist in limiting your outgoings following a failed case, and ensuring adequate ATE protection in place is also imperative to help bring in more revenue for your firm.

Working Digitally To Increase Law Firm Profitability

Going paperless and embracing legal technology can be a difficult transition; however, the benefits of working digitally are endless. A digital case management system will increase the efficiency of all staff by reducing the need for file handlers to rummage through mountains of paperwork to find particular documents. With all your documents in one place, this will free up the time of case handlers, allowing them to focus on more complex areas of litigation and settle cases more efficiently.

A reduction in paper files means that less storage space is required, freeing up areas in your office for additional staff, or allowing you to downsize your office, reducing your real estate costs.

How to Improve Law Firm Profitability Using the Right Case Management Software

Using a case management software which is specifically tailored to your law firm will vastly increase efficiency for your law firm. Proclaim case management software is excellent as it can be developed to meet the bespoke needs of your business.

With Proclaim, document automation can be utilised to help increase efficiency and improve profitability. Standard letter templates that integrate the information from a case can be developed, emails can be automated, and Court forms automatically completed.

Proclaim can be seamlessly integrated with third party software. The opportunities for increasing efficiency and maximising law firm profitability are endless.

With “In Case” your clients can remotely monitor the progress of their file whenever they like (you can customise everything they see) which helps to improve the client experience. Contact Legal Practice Support to find out how a Proclaim developer could assist your firm.

Set Up Proper Review Practices

Proper review practices when a file is being issued can assist in the reduction of wastage and wasted costs. With Court fees for issuing now going up to £10,000 for the highest value cases, the correct systems should be implemented to ensure cases are pleaded at the right amount.

Using Proclaim, automation could be set up to inform a Manager if a case is being requested for issue, and for there to be an authorisation process to verify the quantum amount and merits of pursuing a claim.

Analysis Reports

Analysing real time data is an important task for all businesses to assist with increasing profitability. Proclaim software provides many analysis opportunities through the use of  MI reports.

Staff performance, average monthly spends, financial reporting, and bottlenecks in processes can all be monitored and analysed through Proclaim analysis reports, which can also be automated.

If you are interested in developing Proclaim to increase your firm’s efficiency, take a look at the Proclaim development pages on our website to see how a Proclaim developer can assist your firm.

Invest in Effective Marketing

Many modern law firms pay out thousands to Claims Management Companies (CMCs). The issue with using these companies is that firms are required to pay for each claim, even if they are unsuccessful, resulting in a high level of wastage. It also places reliance upon an external company out of your control.

Having an effective law firm marketing strategy in place will increase awareness of your business, and reduce the necessity for the use of these expensive CMCs. Many law firms who invest in marketing see a considerable return on investment as clients are coming to them directly, instead of through the use of a CMC. Contact us today to find out more about our legal marketing services, such as SEO and Social Media Management.

Focus Your Workload

Diversification is always a positive to ensure numerous streams of income to any firm. However, spreading the work too thinly or focussing a disproportionate amount of efforts into a low-profitable area of revenue can diminish the overall profitability possibilities of your company.

 It can be beneficial to review your business focus on a regular basis, and if a certain market of work isn’t performing as it should, despite time and effort having been expended upon the same, it may be more beneficial to re-focus efforts of the staff onto more profitable areas of work. 

WIP can be preserved and recovered at 100% utilising specialist companies that outsource files to be run to a conclusion. This can be common in personal injury fields where Solicitors are looking to exit certain areas of the market, such as in Road Traffic Accidents.

How Can Legal Practice Support Assist?

LPS offer a range of services and advice on how to improve law firm profitability. The firms we assist experience a huge boost in profits and return on investment due to increased efficiency and reduced overheads. We currently offer legal costs assistance, Proclaim Development, IT Services, and Legal Marketing Services, as well as having significant contacts in the legal market to assist in any areas of interest.

Contact us today using one of our contact forms, email or call us on 01204 930234.



Satisfied client stories

"Since we first began utilising the services of Legal Practice Support, we have seen a dramatic improvement in the capabilities of our Proclaim system. The system has seen substantial enhancements with regards to automation; tasks that previously could take staff hours, can now be completed within minutes."

Mark Brierley

Director, Beacon Law

"Prior to their (Legal Practice Support) involvement, we had little to no reporting; and what we did have was generally manually accumulated data on spreadsheets. Since Legal Practice Support began enhancing our system, they have enabled us to receive key management information as and when required, which allows us to evaluate key areas of the business, as well as provide overviews of fee earners' case progression and their performance amongst other things."

Mr L Ali

Director, Hunter Price Khan

" We have had the out of the box Proclaim system for many years, and whilst we were content with its performance, it wasn't until we utilised the services of Legal Practice Support to help streamline and automate our workflows that we really saw its potential to save time and money by maximising the efficiency of our workflows."


Yasar Ali

Clarity Solicitors

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